Elcina Seeks Rs 72,500 Cr Financial Package To Reduce Import Dependency

The Electronics Industries Association of India (Elcina) has formally requested a financial support package of Rs 72,500 crore (approximately $8.57 billion) from the Indian government. This funding is aimed at boosting local production of electronic components and reducing the country’s reliance on imports. The industry body warns that without significant government intervention, India could face a growing demand-supply deficit in electronics components, projected to reach $248 billion by 2030.

According to Elcina, the demand-supply gap for components in the electronics sector is expected to widen significantly by 2030. With India’s electronics production projected to hit $500 billion, the country will need to address a deficit that could amount to $248 billion, largely filled by imports. Elcina believes that government support could reduce this deficit by as much as $146 billion, fostering greater self-sufficiency and creating up to 50 lakh (5 million) jobs.

Elcina’s proposed package includes a combination of capital expenditure (capex) and production-linked incentive (PLI) schemes. The request is for $2.14 billion in capex to encourage industry expansion and $6.43 billion in PLI to incentivize growth in the non-semiconductor electronics component sector. The industry body emphasized that unlike finished products, where investments can lead to significant returns, the components sector faces lower returns, high operational costs, and long gestation periods, making it less attractive for investors.

The support package is primarily targeted at non-semiconductor components, which account for 60% of the total cost of a finished electronic product. Of this, non-semiconductor components make up 40%, while semiconductors comprise the remaining 20%. Key components for which support is requested include miniature components, printed circuit boards, active components, and metallic parts.

Elcina’s proposal underscores the labor-intensive nature of the electronics component industry, predicting that the government’s support could create 50 lakh jobs by 2030. The body projects that the local production of non-semiconductor components could attract an additional $36 billion in investments by 2030. In 2022, India’s non-semiconductor component production stood at $13 billion, a figure expected to grow to $20.7 billion by 2026 and $37 billion by 2030, assuming the business continues on its current trajectory.

The Indian government has already launched the India Semiconductor Program, which has approved investments worth Rs 1.52 lakh crore to support semiconductor production. However, Elcina stresses that without support for non-semiconductor components, India will remain dependent on imports for a large portion of its electronic production needs.