India is making significant inroads into the electronics export market, eroding China’s dominance in key regions. A recent study indicates that manufacturers are diversifying supply chains away from China, contributing to India’s growing share in electronics exports, particularly in the UK and the US. The geopolitical tensions with China in recent years have fueled this shift, with India offering lucrative incentives to attract electronics manufacturers.
India’s ascent in the global electronics export market is reshaping the landscape as manufacturers seek alternatives to China. The diversification of supply chains, driven by geopolitical considerations, is propelling India into a more prominent role, particularly in the UK and the US.
India’s Impact on Key Markets:
The study by London-based Fathom Financial Consulting highlights the notable shift in India’s electronics exports, particularly in the UK and the US. In November 2021, India’s electronics exports to the US, as a ratio of China’s, increased to 7.65% from 2.51% in November 2020. In the UK, the share surged to 10% from 4.79%, underscoring India’s expanding presence in these markets.
India’s government has strategically incentivized electronics manufacturers to establish a robust presence in the country. These incentives include tax cuts, rebates, streamlined land acquisition processes, and capital support. The objective is to bolster domestic manufacturing, boost exports, and facilitate global-scale growth through strategic partnerships.
India is home to Samsung Electronics Co.’s largest mobile phone factory, and Apple Inc. manufactures a significant portion of its iPhones in India through contract manufacturers Foxconn Technology Group and Pegatron Corp. The surge in electronic exports is attributed to Foxconn’s increased investment in India, according to Fathom Financial Consulting.
Global Impact and Dual Supply Chains:
While India’s progress in gaining market share is significant in the UK and the US, it is more limited in Europe and Japan. This suggests a trend toward dual supply chains, where manufacturers adopt a ‘China plus one’ strategy, diversifying production locations. Globally, India’s electronics exports as a ratio of China’s stood at 3.52%, indicating a growing presence on the global stage.
India’s increasing market share in electronics exports serves as a validation of Prime Minister Narendra Modi’s ‘Make in India’ initiative. The plan aims to create jobs, expand exports, and enhance economic self-reliance by reducing dependence on imports. This development is seen as a positive stride for Modi’s economic agenda, especially as he anticipates winning a third term in the upcoming elections.
Conclusion:
India’s surge in electronics exports is reshaping the global dynamics of manufacturing, presenting new opportunities for the country. As geopolitical shifts influence supply chain strategies, India’s proactive measures and incentives position it as a key player in the evolving landscape, contributing to a more diversified and resilient global electronics market.
