Indian electronics manufacturing is in a boom period

By Pradeep Chakraborty

 

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Electronics manufacturing in India is currently in a boom period, thanks to the Government-induced production-linked incentive (PLI) schemes. The Government of India approved PLIs for 10 key sectors. These include telecom, automobiles and pharmaceuticals, taking the total outlay for such incentives to nearly ₹2 lakh crore over a five-year period. The outlay for telecom and networking products was pegged at ₹12,195 crore.

India is aspiring to become a major manufacturing hub for telecom equipment. They form a critical and strategic element of building a secured telecom infrastructure. India is also aspiring to become a major original equipment manufacturer of telecom and networking products. The incentive scheme for telecom, networking gear will boost manufacturing amid 5G build-up.

Product lines include core transmission equipment, 4G/5G, next-generation radio access network and wireless equipment, and access and customer premises equipment (CPE). They include IoT access devices and other wireless equipment, and enterprise equipment, including switches and routers.

Eligible domestic companies under the non-MSME category include Akashastha Technologies, Dixon Electro Appliances, HFCL Technologies, ITI, Neolync Tele Communications, Syrma Technology, Tejas Networks, and VVDN Technologies.

Eligible global companies (their Indian subsidiaries) under non-MSME selected for the PLI scheme include Commscope India, Flextronics Technologies (India), Foxconn Technology (India), Jabil Circuit India, Nokia Solutions and Networks India, Rising Stars Hi-Tech, and Sanmina-SCI India.

MSME companies include Coral Telecom, Elcom Innovations, Frog Cellsat, GDN Enterprises, GX India, Lekha Wireless, STL Networks, Synegra Ems, Systrome Technologies and Tianyin Worldtech India. Support under the scheme will be provided for five years — from FY2021-22 to FY2025-26.

As per Department of Telecommunications (DoT), 31 applicants are expected to invest ₹3,345 crore in the next four years, and generate incremental employment for more than 40,000 people and boost domestic R&D of new products, on which 15 percent of the committed investment could be invested.

Government of India had earlier approved 16 mobile companies under PLI scheme in October 2020. Mobile phone manufacturing companies approved under mobile phone (invoice value Rs.15,000 and above) segment are Samsung, Foxconn Hon Hai, Rising Star, Wistron, and Pegatron. Among these, Foxconn Hon Hai, Wistron, and Pegatron are contract manufacturers for Apple iPhones.

Under mobile phone (domestic companies) segment, there are Indian companies, including Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs, and Optiemus Electronics that were approved by Ministry of Electronics & IT (MeitY). Six other companies were approved under the Specified Electronic Components Segment, including AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, and Neolync.

PLIs for three categories

Soni Saran Singh, Executive Director, NMTronics India Pvt Ltd, said there are PLIs for three categories: mobile phones, IT hardware products, and telecom equipment. NMTronics has been very active across all three areas.

In mobile phones, there are two segments — global and local. Rs. 15,000 phones have now been brought under local manufacturing. Global companies include Samsung, Rising Star, Foxconn, Vistron, and Pegatron. Local companies include Dixon, Optimus, Lava, Micromax, and Bhagvati Products (Micromax), etc. Around 350 million mobile phones are now being manufactured in India. As a supplier of critical electronics manufacturing equipment for all of these, NMTronics currently has about 90 percent market share. It has sold 55 percent of pick-and-place robots for industrial units in India, so far.

In IT hardware, there has been encouragement for local and global companies. SFO Technologies is doing well, and is placed at no.2 spot after Dixon. In telecom products segment, RF components are now considered to be telecom products. There are some other PLIs for ACs, etc. However, Chinese companies not involved in any of these.

SFO Technologies has been delivering EMS and ODM solutions. It is into aerospace and defense, communications, energy and industrial, healthcare, transportation, IoT, analytics, mobility, GIS, and software testing. In fact, the author had visited SFO headquarters in Kochi (Cochin), Kerala back in 2014, and met N. Jehangir, Vice Chairman and MD.

Encourage domestic production

Prof. NK Goyal, President, Chairman Emeritus, CMAI and TEMA said, in EMS, there are world-class companies like Foxconn, Flextronics, etc., in India. The PLI announcement will definitely encourage domestic production and exports. Foxconn had started from Chennai (Madras).

Local companies are mostly located in Delhi and Noida. Dixon is a big domestic player. Nest Group of companies, with SFO Technologies, is another. Mobile phones and other telecom equipment are being manufactured in India. TEMA also has a mission to make India self-reliant in telecom manufacturing by 2023.

He added that there is great demand for telecom equipment. India is also waiting for demand from Industry 4.0 and IoT products to go up. Certain local manufacturers, such as BEL, Vihaan Networks, Paramount, etc., are trying to keep pace.

Bharat Electronics Ltd (BEL) is a Navratna PSU under the Ministry of Defence, Government of India, manufactures state-of-the-art electronic products and systems for the army, navy and air force. It has also diversified into homeland security solutions, space electronics, including satellite integration, energy storage products, including e-vehicle charging stations, solar, network and cyber security, railways and metro solutions, airport solutions, electronic voting machines, telecom products, smart cities, passive night vision devices, medical electronics, etc.

Vihaan Networks is into mobile broadband networks, homeland security, tactical communications, mobile and wireless signal intelligence, etc.

Paramount is into power cables, telecom cables, including optical fibre cables, jelly-filled cables, FTTH, etc., control cables, domestic cables, including building and solar, and special cables for railways and fire survival.

Gurmeet Singh, Executive Director, Electronics and Computer Software Export Promotion Council (ESC) added that Foxconn has set up a factory in India, and Dixon is coming up as well. Now, the story of the Indian IT industry will be replicated in the electronics manufacturing segment. We are seeing big names that are relocating to India. Indian companies can also come up. As for exports, he said it can only improve overnight. In the long term, people are looking at electronics manufacturing. We will see large investments coming in. Companies are also forming JVs.

While all of this augurs well for the electronics manufacturing industry in India, perhaps, the entry of even more Indian manufacturers will certainly lighten up this field, going forward.