U.S and China have recently locked horns over the semiconductor trade where US accused China of rigging the industry by giving an unfair advantage to Chinese chip companies and artificially reducing the prices of the chips. While China seems to pay no heed to the allegations and continues to expand its innovative semiconductor industry, the clash between these global leaders has certainly carved a window of opportunity for various countries to step up and fill in the inevitable void; which is, ‘the need for an alternate electronics export partner’.
Amidst the uncertainties and the ongoing tussle, the Indian Government recently rolled out its Union Budget which has set straight the country’s ambitious of reviving the electronics manufacturing sector and taking up the role of the alternative export partner global manufacturers seek. An initial allotment of RS 725 crore was made to the manufacturing sector, which is the highest ever investment by the Indian Government in its manufacturing prowess.
In Indian IT industry too seems to be upbeat post the budget announcement and while the global trade policies too seem to be working in their favor. For instance, President Trump, in an attempt to fulfill his poll promise of generating more jobs in America, has proposed a Bill that increases the minimum salaries of H1-B employees to $130,000. This Bill will likely increase the cost of the Indian IT firms, who derive almost 62 percent of their revenue from the US and send a large number of Indian staff to the US on the H1-B visa for offsite work.
The plan to reduce income tax will further increase the purchasing power of the consumer, which would in turn go a long way in increasing the demand in the Electronic System Design & Manufacturing (ESDM), Aerospace and Defence space.
While presenting Union budget 2017-18 in the Lok Sabha, Indian Finance minister, Arun Jaitley confirmed the government’s plans to create an ecosystem which will help India pave the way to becoming a global hub for electronics manufacturers.
Another factor which will prove crucial in giving a leg up to both the ESDM and Aerospace and Defence sectors will be the design-led manufacturing and a robust ESDM ecosystem. Japan, Taiwan, Israel, Singapore and United States are countries that the government and the industry need to keep an eye on. A stronger bond with these countries will only propel up-gradation of the ESDM industry in India.
The odds seem to be playing in the favor of India and recent developments may have boosted the moral of the Indian makers, but becoming a global electronics manufacturing is still a vision is a bit farfetched.