India needs to leverage FTAs to boost electronic exports: NITI report
Cross-border e-commerce will emerge as key driver for India's export growth, says report
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New Delhi: India needs to address its structural cost disadvantages, leverage free trade agreements (FTAs) and promote manufacturing of strategic components to boost its electronics goods exports, according to NITI Aayog's Trade Watch Quarterly report released on Friday.
The electronics segment represents a $ 4.6 trillion global market. However, India's share in this market stands at only around 1 per cent for 2024. Key markets for high-tech components like integrated circuits and semiconductors remain dominated by China, Hong Kong, and Taiwan.
While recent FTAs improve external market access, the government think tank in its report called for greater emphasis on predictable domestic procurement, export finance, and regulatory simplification to attract investments, "especially in a turbulent geopolitical environment".
These measures can anchor India's transition from a manufacturing base to a globally competitive electronics ecosystem and support the $ 500 billion manufacturing ambition by FY2030.
According to the report, which tracked the export trends for the July-September quarter, India should enhance market access and integration into global value chains through proactive trade facilitation, government procurement support, anchor investments, MSME participation, and higher domestic value addition.
It suggested that India's electronics strategy must transition from assembly-led gains to component-led manufacturing. "On the supply side, incentives need to be aligned toward domestic value addition, sustained R&D, and ecosystem deepening supported by anchor investments that transfer technology, improve standards, and generate stable demand for local suppliers," stated the report. Cross-border e-commerce will be emerging as a key driver of India's export growth, supporting the push toward higher merchandise exports by 2030, with electronics likely to play a central role, says the report.
India's export growth between 2015 and 2024 is concentrated in segments like telecom and mobile phones, while segments such as chips and semiconductors show minimal gains.
The country's electronics exports are largely directed to the USA, UAE, and Netherlands, and largely concentrated in mobile phones, which make up 52.5 per cent of the basket, while power equipment and wires contribute smaller shares.
