Why Manufacturing Microchips is essential to India’s Electronic Manufacturing Industry?

India has the real potential to be the manufacturing hub for the world, just like China in the contemporary. However, to establish itself as a global manufacturing player capable of addressing the demands from all global giants, it needs to level up the game. The Coronavirus pandemic has presented a tremendous opportunity for India to become the manufacturing giant as more global companies are moving out of China as considering India as a feasible alternative. India has a golden chance to tap on this opportunity and establish itself as a reliable manufacturing partner for the world.

The improvement in ease of doing business quotient in India has certainly given a major push to its goal of becoming a manufacturing-based economy. However, a lot needs to be done to achieve a feat like that. An important step towards making India a manufacturing superpower is to develop the part and components required in the process of electronic manufacturing. Manufacturing microchips is essential to improving India’s electronic manufacturing industry which acquires a bigger chunk of the manufacturing pie. Let’s delve deeper into why it’s so important.

Bridges the gap between assembler to manufacturer

India’s electronic manufacturing industry has seen an improvement with the government-aided programs for business to help them in this journey. The domestic production of electronic goods has increased from $29 billion in 2014 to $70 billion in 2019. However, India is primarily known as an assembly hub instead of being the manufacturing hub. The gap that persists between assembly and manufacturing can be filled with the indigenous manufacturing of microchips which are essential to producing electronic items. Moving up from major assemblers to major manufacturers will have multiplier effects on the economy of India.

Improves the net value addition

A very important observation related to the Indian electronic manufacturing and assembly industry is that despite a huge growth in production of electronic goods in India, the net value addition is on the lower side of the scales. As per research reports, the net value addition by this segment is in the range of 5 to 15 per cent which is very low. So why is it like this? Well, one of the major reasons for this dismal net value addition is that most of the components are imported in India from China or other nations. Reducing the import for components such as microchips is the need of the hour to boost the electronic manufacturing sector and increase its contribution to the economy.

Osel is among the industry leaders in the Indian electronic manufacturing segment. It caters to a wide range of electronic manufacturing and related services.

Conclusion

This article primarily focuses on the contemporary Indian electronic manufacturing scenario. It emphasizes the importance of creating key electronic components like microchips and also explains why is it so crucial for India to establish itself as a manufacturing giant.