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Imports decline as PLI scheme boosts domestic production of electronics components

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In Short:

India’s local manufacturing of electronics is increasing, leading to a sharp fall in imports of components like charger adapters and plastic parts. The government’s production-linked incentive scheme has driven a 5% rise in local manufacturing, especially in smartphones. Import duty on certain components was reduced to make local manufacturing more competitive. Electronics exports also saw a record growth, with Apple and Samsung leading the way.


Local Electronics Manufacturing in India Witnesses Substantial Growth

India’s local manufacturing of electronics is on the rise, with a significant increase in the production of various components within the country. This growth has resulted in a considerable decrease in the imports of mechanics, vibrator motors, charger adapters, plastic parts, and other components both in terms of value and volume.

Key Findings

According to data from the commerce ministry, imports of completely boxed units of electronics, such as smartphones, have fallen by 40% during April-January FY24. Market analysts attribute this decline to the growth of local manufacturing, particularly in the smartphone segment, which saw a 5% increase in production in 2023.

Under the government’s production-linked incentive (PLI) scheme, more manufacturers are procuring components locally, especially those that have a significant impact on the bill of materials (BoM).

Imports of plastic parts, including back covers, GSM antennas, and camera lenses for smartphones, have decreased by 33% by volume and 26.5% by value in the first 10 months of FY24 compared to the previous year. Similarly, imports of mechanical parts, such as vibrator motors, screws, and sockets, have also seen a decline.

Duty Reduction

Import duty on these components was reduced from 15% to 10% in the recent budget, aiming to boost the competitiveness of local manufacturing in comparison to other countries.

Charger adapters, essential accessories for mobile phones and electronic devices, experienced a significant 72% drop in volume imports during the April to January 2024 period, although there was a slight increase in import value.

Industry Insights

Industry analysts emphasize the importance of enhancing local value addition to make exports more competitive. While high-ticket items like camera modules, display assemblies, and battery packs saw increased imports last fiscal year, there is a need to deepen local manufacturing capabilities in these areas.

Exports and Semiconductor Imports

On the export front, India witnessed a record 22.24% growth in electronics exports in the first nine months of the fiscal year, crossing the $20 billion mark. Apple and Samsung contributed significantly to this growth, with iPhones alone accounting for $7 billion worth of exports in December 2023.

Semiconductor imports, crucial for electronic goods manufacturing, rose by 0.5% in volume and 20% in value during FY24, driven by the demand for high-end semiconductors and rising wafer costs.

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