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Challenges faced by the Indian electronics industry UPSC NOTE

 Key Challenges:

  • Restrictions on Chinese Investment and Skilled Personnel:

  • Introduced in 2020 (Press Note 3) to prevent predatory acquisitions during the pandemic.

  • Considered outdated and hindering component ecosystem development.

  • CII suggests revisiting these restrictions with "adequate guardrails".

  • High Import Duties on Electronics Components:

  • Duties range from 0% to 27.5%, with most components attracting 10-15% duty.

  • This inflates manufacturing costs compared to competitors like Vietnam and China.

  • Limited Production Linked Incentive (PLI) Scheme Impact:

  • Introduced in April 2020 to offset cost disadvantages.

  • 4-6% fiscal support under PLI deemed inadequate to compete with lower costs in China and Vietnam.

Confederation of Indian Industry (CII) Recommendations:

  • Relax Restrictions on FDI and Skilled Personnel:

  • Promote a "non-restrictive approach" for investments and technology transfer.

  • Ease movement of skilled personnel for knowledge sharing.

  • Rationalize Import Duties on Components:

  • Reduce duties on priority sub-assemblies and components to 5% or lower.

  • Align duty structure with competing economies to improve competitiveness.

  • No country can be self-sufficient in electronics production.

  • A balance between imports and exports is crucial for long-term growth.

  • China, with a $1.6 trillion electronics trade, still relies on 42% imports.

  • Current policies are hindering India's ambitions of becoming a major electronics manufacturing hub.

  • The industry suggests a shift towards a more open and investment-friendly environment with rationalized duties to be globally competitive.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Challenges faced by the Indian electronics industry UPSC NOTE
Challenges faced by the Indian electronics industry UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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