Mobile exports surge, value addition still thin

The launch of the India Semiconductor Mission (ISM) 2.0 and the Mobile Phone Manufacturing Scheme (MPMS) has brought the electronics sector into public discourse once again. The aim of these schemes is to lower India’s dependence on imports and enhance value addition for domestic and world markets.

The production of electronic goods witnessed a compound annual growth rate of 18.66 per cent during FY16-25. Mobile phones alone accounted for over 48 per cent of the total production of electronic goods.

The trade deficit in electronic goods has nearly doubled in the last decade.

India’s export basket of electronic goods is heavily skewed towards telecom instruments, with nearly two-thirds of export earnings coming from smartphone shipments. Rising smartphone exports are, however, fueled by increasing component imports, whose share in India’s imports of electronic goods has doubled in the last decade. Import dependence on computers, laptops and telecom instruments persists.

Due to the increased usage of imported components in India’s electronic exports, domestic value addition in exporting electronic products halved in 2022 compared to 2017. Among other major manufacturing economies, only Vietnam had lower domestic value addition in the electronics sector than India. Business Standard