From cellphones to chips, Indian manufacturing is entering a golden age

In 2018, South Korean giant Samsung opened the world’s largest cellular factory in India. The 35-hectare facility in Sector 81 in Noida, Uttar Pradesh, was officially inaugurated jointly by Prime Minister Narendra Modi and South Korean President Moon Jae-in, putting the country firmly on the global manufacturing map.

The country had already experienced a massive turnaround in mobile manufacturing. Before 2014 there were two mobile manufacturing plants and now more than 200 manufacturing plants have sprung up in India, producing millions of devices and exporting them to other countries.

Fast-forward to 2023. Led by locally made mobile phones, India’s electronics industry saw record exports of electronics worth an estimated $1.85 trillion in FY22-23, up 58 percent.

According to the India Cellular and Electronics Association (ICEA), mobile phone exports made history by surpassing US$10 billion for the first time in a fiscal year, reaching an estimated US$11.12 billion in FY23 (over Rs. 90,000 crore) reached.

This growth was primarily driven by the Apple ecosystem, which saw 23 exports from India totaling a record $5 billion in the fiscal year alone.

The country has meanwhile made a big step in manufacturing IT hardware (laptops, servers, tablets), semiconductors and more.

An example of this is Vedanta-Foxconn Semiconductors Limited (VFSL), a joint venture between Foxconn and the Vedanta Group. Vedanta and Foxconn signed a memorandum of understanding (MoU) with the Gujarat government last year to invest Rs. 1.54 trillion to build the semiconductor and display manufacturing facility, which is India’s first.

In April, Vedanta Group signed memoranda of understanding with 20 Korean display glass companies to develop an electronics manufacturing center in the country.

The center approved an updated production-linked incentive (PLI) program for IT hardware last week, nearly doubling total spending on the program to approximately 17,000 crore.

The duration of the program is six years and the government expects to invest Rs 2,430 crore in the program.

“PLI 2.0 for IT hardware will be a catalyst for India’s US$300 billion electronics manufacturing mission, an important part of India’s trillion dollar digital economy goal,” said Minister of State for Electronics and IT Rajeev Chandrasekhar.

The IT-Hardware-PLI 2.0 focuses on the expansion of Indian production and presence in the global value chains of IT-Hardware/Servers/Laptops.

The country recently introduced a 76,000 crore Production Linked Incentive (PLI) program for semiconductor and display manufacturing units.

Earlier this month Prime Minister Modi unveiled a budget of Rs. 1,200 crore to invest in Indian semiconductor design startups.

According to Chandrasekhar, the government aims to establish 100 semiconductor design startups in the near future, which will create innovative designs and solutions not only for the domestic market but also for the world.

According to the minister, the country will soon have a talent pool of 85,000 highly skilled professionals in the semiconductor field.

According to a recent joint report by Counterpoint Research and the India Electronics and Semiconductor Association (IESA), India’s semiconductor market was valued at US$22.7 billion in 2019.

The $64 billion forecast for 2026 is expected to be supported by both domestic and export markets with significant demand from consumer electronics, telecom, IT hardware and industrial sectors.

India’s “telecom stack” and industrial applications are expected to account for two-thirds of the total.

“In the near term, there is a tremendous opportunity driven by domestic demand in applications such as sensors, logic chips and analog devices,” said Tarun Pathak, director of research at Counterpoint.

“Local sourcing is already taking place on a significant scale. In 2022, it accounted for around 10 percent of the total market,” he added.

According to Amitesh Kumar Sinha, CEO of ISM and Joint Secretary of MeitY: “India is striving to become a trusted partner in global supply chains and we are working towards that by setting long-term policies while keeping an eye on the next 25 years.”

As India’s 5G rollout gathers momentum, Prime Minister Modi is already laying out the blueprint for 6G and has asked global giants like Cisco to start research and development (R&D) around next-generation telecom technology to help millions more to strengthen more.

The company’s Chief Operating Officer (COO), Maria Martinez, told IANS earlier this month that Prime Minister Modi had asked her to commit to 6G.

“We talked about setting up a kind of joint research and development around 6G. We are very excited to see 5G roll out globally, including in India. We’re also very excited for 6G,” Martinez said.

The Prime Minister has already emphasized that the 6G initiative will create new opportunities for innovators, industries and start-ups. In March, he released a vision document detailing India’s plans to develop and roll out 6G telecom services a few years from now.

The Modi government’s next target is to increase electronics manufacturing capacity to 24 million rupees by 2025-2026, which will also help create over 10 million jobs.

Next, Tesla could manufacture its electric cars in the country. Elon Musk is likely to select a new location for a Tesla factory by the end of this year, and he believes India is an integral part of his plan.

In an interview with The Wall Street Journal, when asked if India was an interesting choice for a new Tesla location, Musk replied, “Absolutely.”

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