India is at the cusp of a manufacturing renaissance and a number of trade and industrial policies at home and the growing fragility of supply chains abroad, have meant that the global electronic firms are looking to India to diversify their manufacturing base and spread the source of their exports, an industry report said.
A report by ICRIER titled ‘Globalise to Localise: Exporting at Scale and Deepening the Ecosystem are Vital to Higher Domestic Value Addition’ explores how India can achieve electronics production target of $300 billion and exports of $120 by 2025-26.
“Our Make in India programme has catalysed an otherwise weak manufacturing economy and given its new momentum, opportunities, and expansion. Consequently, India today is the world’s second-largest manufacturer of mobile phones – with a clear focus on exports first followed by domestic value addition,” said Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, Skill Development and Entrepreneurship, speaking at the launch of the ICRIER report.
The report examines the empirical relationship between exports and the share of domestic value addition in successful exporting nations. It finds that the two variables are negatively correlated in the short-run, but exhibit positive correlation in the medium-term.
“Our study finds that China and Vietnam have adopted the mantra of ‘first globalise, then localize’, which means in the initial years they were determined to achieve global scale in exports, and then shifted their emphasis to greater use of local contents,” said Deepak Mishra, Director of ICRIER and the lead author of the report.