India’s imports of electronic goods topped $20 billion for the fifth time in the April-June quarter of 2024-25 (FY25), more than half of which was accounted for by electronic components and computer hardware.
Most of the components are used by the mobile phone industry, and despite the increase in their domestic manufacturing, the country is still dependent on high-value imports. This calls for a production-linked incentive (PLI) scheme at the component level too, according to experts.
Electronic goods worth $22.8 billion were imported in the first quarter of the ongoing financial year compared to $23.4 billion in the previous quarter. The import bill of such goods has consistently accounted for over a fifth of the total imports (chart 1).
Electronic goods include the imports of computer hardware, consumer electronics, electronic components, electronic instruments and telecommunications instruments.
But of these items, electronic components and computer hardware account for more than half of the total electronic goods imports in the June quarter compared to 46 per cent before the pandemic. Electronic components are mostly used in the assembly of mobile phones in India.
Tarun Pathak, Research Director, Counterpoint Research, says that while 15 per cent of the components by value of an assembled mobile phone are locally manufactured in India now, the ratio was 3-4 per cent a decade ago.
“But we are still dependent on imports of high-value components like chips, display, camera modules because the manufacture of these components requires investments on a large scale. So we need a similar PLI scheme at the component level so that we can localise that production as well,” he explains.
India started the PLI scheme in April 2020 to encourage local manufacturing and investments in the mobile phone segment. The increase in India’s mobile phone exports is driven by the rise in domestic assembly. A similar scheme for manufacturing IT hardware was implemented last year.
Pathak further adds that a larger chunk of the sub-components procured locally are from global companies who have started their operations in India.
“Most of the telecom instruments that we import are network-related equipment procured from the likes of Ericsson, Nokia, etc. But of late there has been a lot of focus on domestic manufacturing as well,” says Ankit Jain, Vice President and Sector Head, Corporate Ratings, ICRA Limited.
But unless the domestic manufacturers become big enough to service the needs of the larger telcos, the share of domestic manufacturing is likely to remain relatively small, he says.
Electronic goods continued to be the third biggest item in the import bill of India. Moreover, the growth in imports of such goods is second only to the growth in crude oil imports.
Imports of electronic goods grew by 12 per cent in the first quarter of FY25 when compared to the same period last year.
First Published: Aug 06 2024 | 8:39 PM IST
