Union Budget 2024: Will India’s Dream of Becoming an Electronics Powerhouse Manifest?

According to the Economic Survey 2023-24, India assembled 14 percent of global iPhones in FY24, marking a significant boost in the country's electronics export ranking. The Survey, presented in Parliament by Finance Minister Nirmala Sitharaman, highlighted that the mobile phone segment has driven the most growth within the electronics sector, with exports to the US rising from USD 2.2 billion in FY23 to USD 5.7 billion in FY24.

Apple assembled USD 14 billion worth of iPhones in India during FY24, accounting for 14 percent of its global iPhone production, according to third-party data cited in the Economic Survey. Foxconn, one of Apple’s major suppliers, has commenced production of Apple mobile phones in Karnataka and Tamil Nadu.

India's share in global electronics exports improved from 0.63 percent in 2018 to 0.88 percent in 2022, moving up from 28th to 24th in global electronics export rankings. The share of electronics goods in India's merchandise exports increased from 2.7 percent in FY19 to 6.7 percent in FY24. The electronics manufacturing sector in India has seen substantial growth since 2014, accounting for an estimated 3.7 percent of the global market share in FY22 and contributing 4 percent to India's total GDP in FY22.

Domestic production of electronic items surged to Rs 8.22 lakh crore, while exports rose to Rs 1.9 lakh crore in FY23. Over the past five years, India has become an attractive destination for investments in this sector, establishing substantial manufacturing capacities.

The Survey referenced a study by the Centre for Development Studies, indicating a significant increase in domestic value addition (DVA), employment, wages, and salaries in the mobile manufacturing segment since FY17. The share of DVA in mobile phone output increased from an average of 8.7 percent in FY17 to FY19 (Phase 1) to 22 percent in FY20 to FY22 (Phase 2), showing considerable growth in local participation.

Although the DVA as a ratio of exports may be low, the Survey noted that participating in global value chains (GVC) enhances overall value added due to economies of scale in manufacturing for the vast global market.