New Delhi: India can generate a manufacturing value of 100 billion dollars by 2025 if it starts making laptops and tablets, said a new report by the India Cellular & Electronics Association and Ernst & Young, released Wednesday.
The report estimated this will also create 5 lakh jobs, contribute 1.26 per cent to the GDP, help reach inflow of foreign exchange to 75 billion dollars, and an investment of over 1 billion dollars.
It said local manufacturing will also reduce the import of laptops and tablets from China. Currently, India imports 87 per cent laptops and 63 per cent tablets from China.
The report, titled ‘Atmanirbhar Bharat India’s turning point: An agenda for manufacturing laptops and tablets for India and the world 2021-26 US $100 bn opportunity’, also recommended ways through which policymakers can pave the way to achieve this goal.
It estimated the global market for tablets and laptops at 220 billion dollars annually for the next five years. In India, the market is estimated at 7 billion dollars during the same period.
Despite the billion dollar local market, India has had “abysmal” growth in computer hardware manufacturing, the report stated.
The report attributed this slow growth to India’s reliance on imports that mostly come from China.
“For the year ending March 2021, India’s import of laptops is estimated to reach close to US $ 5 billion, wherein those from China are expected to hit US $ 4.35 billion,” the report said, adding that tablets imported for the year ending 31 March 2020 was 0.41 billion dollars.
“Just like laptops, two-thirds of all tablets sold in India are imported from China.”
In comparison to imports, India’s exports have dropped. For example, India’s tablet exports have gone down from $0.06 billion to $0.024 in the last five years — “over a 50% drop!”
“For the year ending 31 March 2021, India’s import of tablets is estimated to be in the range of US $ 0.35 billion, while exports are unlikely to cross even the US$ 0.02 billion mark,” said the report.
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India focused on phone-making capabilities
The report said India focused on growing its phone-making capabilities, but not on manufacturing laptops and computers.
It said mobile phone manufacturing grew annually at 64 per cent, while computer hardware manufacturing grew at 3.8 per cent a year from 2014-15 to 2019-20.
This showed there is “tremendous scope for policy intervention” to increase laptop and tablet manufacturing.
“This will achieve the twin objectives of reducing dependency on China and making in India for the world to obtain a sizable share of the global market,” the report added.
Areas where intervention is needed
The report said as more and more companies seek to rely less on China for manufacturing in the wake of the Covid-19 pandemic, and a “growing mistrust between China and the Western economies (the US and EU, in particular)”, India can attract some of the companies and be a bigger player in the global supply chain for electronics with the right policies in place.
For this, the report said, there is a need to address the issues of inadequate infrastructure along with “domestic supply chain and logistics, high cost of finance, inadequate availability of quality power, limited design capabilities and focus on R&D by the industry and inadequacies in skill development”.
In addition, there are unfavorable taxes, inadequate ease of doing business that makes “India almost 10 per cent-20 per cent less competitive than Vietnam and China, respectively”.
The report suggested the government should provide WTO-compliant incentives to offset the drawbacks while enabling a “fast-paced electronics manufacturing relocation to India”.