Budget 2024: FM Unveils Measures To Strengthen Domestic Electronics Industry

Finance minister Nirmala Sitharaman announced a number of measures during her Union Budget 2024-25 (FY25) speech to boost the domestic electronics industry. 

“To increase value addition in the domestic electronics industry, I propose to remove the Basic Customs Duty (BCD), subject to conditions, on oxygen-free copper for the manufacture of resistors. I also propose to exempt certain parts used in the manufacture of connectors,” the finance minister said.

Additionally, she proposed exempting certain parts used in manufacturing of connectors.

Manufacturing was a clear focus of the finance minister in the budget. She also announced a credit guarantee scheme for MSMEs in the manufacturing sector. 

Boosted by the Centre’s focus on making India a manufacturing hub for electronics and introduction of production-linked incentive (PLI) schemes, the country’s electronics manufacturing space is buzzing with activities. These policies have positively impacted various sectors, including smartphones, electric vehicles (EVs), semiconductors, and large-scale electronics hardware manufacturing. 

The smartphone manufacturing space has seen the biggest boost, with the likes of Apple, Google, Xiaomi producing mobile phones in India.

A recent report by NITI Aayog said that India should aim to achieve $500 Bn in electronics manufacturing by the financial year 2029-30 (FY30). It also noted that this target could help create 5.5 Mn to 6 Mn direct jobs in the country by the end of the same fiscal year.

The report highlighted that, despite advancements in infrastructure and ease of doing business, India’s electronics market remains relatively modest, accounting for only 4% of the global market. It pointed out that the sector has predominantly focused on assembly with limited capabilities in design and component manufacturing. 

However, electronics production experienced significant growth, doubling to $101 Bn in FY23 from $48 Bn in FY17, largely driven by mobile phone manufacturing, which accounts for 43% of the total electronics production.

Earlier in May, the Centre began consulting companies and industry groups to develop policies that encourage electronics manufacturers, such as Apple, to increase their design activities in India.

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