Modern life is incomplete without electronic devices. But what is the heart of an electronic device and constitutes up to 50% of the cost of manufacturing? The answer is printed circuit board assembly or PCBA, on which the other components are mounted. And this presents India with an opportunity. As per a new report jointly penned by India Cellular & Electronics Association (ICEA) and consulting firm EY, India has the potential of becoming a a $109-billion global manufacturing and export hub for PCBAs during the years 2021-2026.

This can also result in reducing drastically India’s reliance on China, which is currently the world’s largest exporter of PCBAs, says the report titled Atmanirbhar Bharat: Making India the global hub for Printed Circuit Board Assembly (PCBA). The report argues that growth in PCBA manufacturing would principally be driven by four key electronic product segments in the coming years—mobile phones; tablets and personal computers; smart televisions and other smart devices; and consumer appliances. The report further estimates that the global PCBA market across these four segments could be to the tune of around $358 billion by 2025-2026.

As per the report, the US–China trade war has set off tremors in global value chains. "Disruptions caused by Covid-19 has highlighted the risk of being dependent on a few geographies. There is now a strong realisation among multinational companies that supply chains must be de-risked and these companies are looking at diversifying to other countries," it argued. This is where India can chime in, becoming in the process a manufacturing and export hub.

The report does recognise contributions from the present Indian government in attempting to push India to acquire for itself a greater role in the global manufacturing space. It also commends policies such as Atmanirbhar Bharat Abhiyan and other production-linked incentives (PLI) schemes to attract investments in mobile phone manufacturing. But the report does add a caveat, which is, although such schemes are welcome, yet the stark reality still is that majority of mobile phone manufacturing in the country are still only assembly operations.

"Over the past years, favourable policies and ecosystem collaboration have been pivotal in defining India’s mobile manufacturing prowess. The global demand for electronic products is evolving at an exciting pace, and India is emerging as a promising alternative for PCBA manufacturing. Now is the time to invest in the potential and embed electronics manufacturing in the fabric of ‘Make in India’ vision," said Prashant Singhal, Emerging Markets TMT leader, EY, in a press release.

The right policy impetus on PCBA could go a long way in transforming India from "mobile phone assembly to full-fledged electronics manufacturing hub", Singhal said. "By extending enabling policy incentives to PCBA manufacturers, India can strengthen its position in the global supply chain and fast-forward the ‘Atmanirbhar Bharat’ vision with $109 billion export potential in the next five years."

ICEA estimated that PCBA manufacturing can lead to backward integration and development of components ecosystem in India. However, it said that for a successful setup of PCBA manufacturing base in India would require addressing of disabilities adding to the costs for manufacturers.

Standalone PCBA exports from India face cost disabilities against well-established manufacturing hubs, with large manufacturing capacities, such as China and Vietnam, the report argued. "In addition, China offers various incentives for R&D activities, tax benefits on exported goods, policies to promote an export culture, significant investments across the value chain and technology transfer from global players."

In light of this, the report reasons that if PCBAs can receive a support of 6% on exports, 2025-2026, the cumulative PCBA export for India can then reach up to $109 billion. "However, if no support is offered, the export is estimated to dwindle to a mere $4 billion," it pointed out.

Pankaj Mohindroo, chairman, ICEA noted that it is imperative to offset the disabilities vis-à-vis China and Vietnam and encourage industry players to set-up manufacturing facilities in India.

"Companies manufacturing in India suffer a disability due to inadequate availability of quality power, infrastructure and logistics; lack of domestic supply chain; high cost of finance; limited R&D etc. PCBA exports can be the next great opportunity for India’s electronics exports after mobile phones and appropriate incentives are being recommended in line with the PLI scheme announced for mobile phones,” he said.

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