The Hi-Tech manufacturing sector presents tremendous growth opportunities for India. The Government of India has launched reforms aiming to increase the manufacturing sector’s share of GDP from 16% to 25% of GDP by 2025 – but many challenges remain to attain this target. Currently, India contributes less than 3% of the global output of key high-tech manufacturing industries, including electronics, aerospace, and medical devices.

This report outlines key factors impacting India’s competitiveness for companies planning to set up manufacturing operations. It also provides recommendations for how these challenges can be addressed to make India a dynamic player in the global value chain.

Highlights

  • India’s high-tech sectors have the potential to offer an additional investment of USD 21 billion and create 550,000 direct jobs and 1,400,000 indirect jobs over the next 5 years.
  • The Government of India has undertaken a number of initiatives and policies to support domestic production of electronics and other high-tech manufactured products.
  • The biggest challenge for the electronics, aerospace, and medical device industries in India is the lack of a strong domestic supplier ecosystem, requiring key components to be imported.
  • Other challenges for the high-tech manufacturing industry include logistics costs, workforce skill level, and regulatory policies.

Recommendations

The initiative developed a number of policy recommendations, detailed in the report, to facilitate the short- and long-term growth of India’s high-tech manufacturing industry. Key recommendations for short-term growth include revising Preferred Market Access policies, incentivizing capital expenditure (CapEx) investments, passing tax reforms that would make the manufacturing sector more cost-effective, and improving the import process by standardizing duties, exempting or continuing to exempt key tech imports from tariffs, and digitize the import clearing process for greater efficiency.

Policy recommendations for long-term growth include developing a strong domestic supplier ecosystem, developing a skilled workforce for large-scale manufacturing, reforming labor laws, and relaxing foreign exchange controls to incentivize investment in India.

India’s high-tech sectors have the potential to offer an additional investment of USD 21 billion and create 550,000 direct jobs and 1,400,000 indirect jobs over the next 5 years.

Major locations for high-tech manufacturing industries in India

Source: Deloitte

Indian Electronics Industry - Segments (FY18, USD Bn)

Source: MeitY, Deloitte

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