India needs to double down on electronics manufacturing; govt, India Inc should make most of opportunity, says Tata Electronics Chairman

Tata Electronics Chairman Banmali Agrawala said the country needs to double down on electronics manufacturing, particularly on electronics manufacturing services (EMS) – designing, manufacturing, and testing electronic components and assemblies for OEMs. While speaking at FED Dialogues, a series featuring conversations on economic growth, Banmali Agrawala said that EMS is perhaps the single-largest job-creation opportunity for India in the near term.

“The largest piece within electronics is smartphones. And if you look at the smartphone manufacturing ecosystem, we now have that growing so fast within India; it all started with EMS.

Even within EMS, it starts with final assembly; then, you work further upstream into manufacturing and machining. And now, you see the smartphone component industry mushrooming, from glass to batteries to packaging of chips. EMS is maybe the single largest job creation opportunity. So, it also fulfils our other objective, which is to create many well-paying and meaningful jobs,” said Banmali Agrawala.

He further explained how India had gone ‘slow’ on the manufacturing front and needed to ensure that the sector – which accounts for 13-15 per cent of India’s GDP – has a much larger share as it will create better-paying jobs. “The global trade in manufacturing is $15 trillion plus, whereas services is $7 trillion; so, manufacturing is more than twice the size of services. Our share in the global trade in manufacturing is negligible, so there is ample room for growth. Electronics, on its own, has a global trade worth $5 trillion. Given the pace of digitalisation the world over, it is only going to grow, and this is something India should be after,” he said. The chairman of Tata Electronics further stated that India’s domestic consumption is not going to be enough to be able to achieve sustained economic growth. “We have to have the world as our marketplace.”

Banmali Agrawala hailed the government’s ‘sense of urgency’ for getting things done while arguing against scepticism about electronics assembly in India. “There is nothing low in it. Even assembly is reasonably complex. We have not seen scale, precision, and surface finish happen simultaneously at a single location in our country, but it is not insurmountable. We can definitely do it!” While maintaining this, he also talked about how the government and India Inc can work to make the most of the opportunity. “It’s not just the quantity but also the quality of power and water supply that matters. This makes the difference; the logistics in terms of connectivity to airports, proximity of airports, because the components industry moves through air. The government would do well to ensure this enabling infrastructure is in place. A lot of this is in the domain of state governments,” he said.

“This is going to be a people-heavy operation. We’re talking about youngsters, 50,000 – 70,000 people working in a single factory or location, aged 20-25, mostly women, so we need to ensure that the supporting ecosystem for education, healthcare and recreation is in place. On skill development, I would argue that a basic platform of education should impart a know how of skills such as numeracy, communication and logical reasoning. The specific skills of manufacturing can be taught by the employer.”

Finally, he added that while several multinationals are setting up shop in India and implementing things on scale, Indian corporates should shed their conservatism and risk aversion to seize this opportunity.