Electronics Manufacturing Sector in Focus as Government Approves PLI Scheme

Market Overview

Shares of electronics manufacturing firms are expected to remain focused following the approval of a new production-linked incentive (PLI) scheme. The decision, announced on March 28, aims to promote domestic manufacturing of passive or non-semiconductor electronic components.

Government's PLI Initiative

The Union Cabinet has sanctioned a PLI scheme specifically designed to enhance the production of passive electronic components. A budget of Rs. 22,919 crore has been allocated for the scheme and is set to be implemented over six years. According to Union Electronics and IT Minister Ashwini Vaishnaw, the initiative is projected to create direct employment opportunities for 91,600 individuals and attract an estimated investment of Rs 59,350 crore.

Vaishnaw highlighted that passive components fall under the Electronics Component PLI scheme and will support multiple sectors, including telecom, consumer electronics, automobiles, medical devices, and power. Additionally, the scheme is anticipated to generate a production output of Rs 4.56 lakh crore.

Impact on Electronics Manufacturing

The initiative aligns with the country's broader efforts to develop capital goods and machinery for electronics production. Significant industrial hubs for electronics manufacturing have emerged in cities such as Pune, Coimbatore, Rajkot, and Bangalore. Furthermore, India has seen an expansion in its supplier network, with companies like Apple now working with 64 suppliers within the country.

According to the Electronics Industries Association of India (Elcina), the domestic production of non-semiconductor electronic components stood at approximately $13 billion in 2022. Projections indicate that this figure could reach $20.7 billion by 2026 and approximately $37 billion by 2030. However, the industry still faces a significant supply gap, with a projected deficit of $248 billion over the next six years, largely met through imports.

Summary

The approval of the PLI scheme marks a significant step toward strengthening India's electronics manufacturing sector. The initiative aims to reduce import dependency, boost employment, and enhance industrial capabilities across various sectors by promoting local production of passive components.