New Delhi: There’s an irony in the “Make In India" campaign, the plan to make Asia’s third biggest economy into a global manufacturing hub, unveiled by Prime Minister Narendra Modi with much fanfare in New Delhi, that was hard to miss for those present at the event.

The USB flash drive containing the electronic versions of the brochures was made in China.

While it may have been an oversight on the part of the department of industrial policy and promotion (DIPP), which was in charge of the rather well-organized event, the gaffe highlighted the limitations of India’s electronic manufacturing sector. Even though India has announced several programmes to promote domestic electronic manufacturing, these schemes have failed to work in the absence of a necessary ecosystem.

India imports 65% of the current demand for electronic products, most of it from China. If the situation is left unchanged, the country’s electronics import bill may well surpass its oil import expenses by 2020.

The “Make In India" website, launched on Thursday, identifies memory cards and USB drives as one of the top 10 electronic products in terms of revenue.

India had abandoned electronic manufacturing 35-40 years ago, said Hemant M. Joshi, a partner at Deloitte Haskins and Sells LLP, a consultancy. “That was the time when countries like China, Japan, Korea and Taiwan started focusing heavily on the sector," he said. “India is paying the price for it now."

While the demand for electronics hardware in India is projected to increase to $400 billion by 2020, the estimated domestic production could rise to $104 billion only, creating a gap of $296 billion, which has to be met through imports, according to a report by Deloitte Touche Tohmatsu India Pvt. Ltd.

India imported $38.46 million worth of USB flash drives from China in 2013-14.

In total, India imported $120 million worth of USB flash drives in 2013-14, while it exported $39 million worth of the item during the same year.

The main destination for India’s exports of the item was France, to which it shipped $17.2 million worth in 2013-14.

The fact that India exports USB flash drives also means that DIPP could have sourced them from one of the many Indian manufacturers of the item such as Moser Baer India Ltd and Brandstik Solutions Pvt. Ltd, rather than from China.

“The major challenges that we face is the cost of setting up the units. The other major challenge is skilled resources. Training workers and affording skilled professionals has been very difficult in India," said Mangal Chechani, co-founder of Wow Retail Pvt. Ltd, a four-year-old electronics manufacturing company that sells USB drives and other electronic products under the brand name Next USB.

In comparison, Chechani said the Chinese electronic industry is mature and organized. “Once you get the access, doing business becomes easy as all the required resources, skill and know-how are available," he said. Wow Retail has one factory in China and two assembly units in India.

Interestingly, China also launched a “Made in China" campaign, coinciding with India’s campaign, seeking to retain its manufacturing prowess. Under the new campaign, China will use tax breaks to encourage enterprises to upgrade their equipment and increase research and development efforts to improve the manufacturing industry, PTI reported from China.

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