India Shifts Focus to Export-Led Growth in Smartphones and Electronics, Says IT Minister Ashwini Vaishnaw

The Indian government, having achieved significant success in domestic mobile manufacturing, is now strategically focusing on export-led growth for smartphones and electronics, according to Communications and IT Minister Ashwini Vaishnaw. In an exclusive interview, he stated that India has become part of the global value chain (GVC) for mobile phones and electronics, and the country is now poised for rapid export growth. To facilitate this, the Ministry of Electronics and IT (Meity) will collaborate closely with the Ministry of Finance to ensure smooth movement of goods across borders, addressing factors such as import duties, processes, automation, and warehousing.

Vaishnaw emphasized the need for speed in the movement of goods across borders, given the nature of the global value chain where products cross borders multiple times before reaching the final stage. He cited the successful development of a domestic component ecosystem in India, highlighting that nearly 30% of components are now manufactured domestically in volume terms. The minister emphasized the pivotal role of semiconductors in increasing the value of domestic value addition.

Comparing India's progress with China and Vietnam in the electronics manufacturing chain, Vaishnaw noted that India's domestic value addition is around 15-18% in nine years, putting it in close proximity to Vietnam. He emphasized that India has entered the global value chain at an opportune time. The minister also highlighted that exports of various components, including mechanicals, chargers, and PCB assemblies, have already commenced from India.

Vaishnaw explained the complexities of the global value chain, emphasizing the importance of factors like duties, processes, automation, and warehouses. He discussed the movement of products across borders multiple times, illustrating the intricate nature of the system. Warehouses play a crucial role in storing products for multiple manufacturers and supplying components.

The government's MOOWR Scheme (Manufacturing and other operations in a customs bonded warehouse) supports this initiative by allowing manufacturers to import components duty-free for domestic production for export purposes. However, concerns have been raised over the FY24 Budget's imposition of integrated goods and services tax (IGST) at the rate of 18% on such imports, impacting various production-linked incentive schemes for IT hardware and smartphones. Semiconductor manufacturer Micron Technology has already expressed concerns about this development.