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Indian SMEs In The Electronics Sector Need Urgent Government Support

The Indian electronics market is growing rapidly and is now one of the largest in the globe. The government is introducing various policies and initiatives so that, in tandem with the booming market, the domestic electronics manufacturing industry too can flourish, and create vast employment opportunities. The government envisages this sector will play a very pivotal role in the PM’s ambitious plan of making this nation a US$ 5 trillion economy by 2025.

By Nijhum Rudra

Back in 2015, the Indian electronics sector was valued at US$ 75 billion. Foreign direct investment (FDI) inflows in the ESDM sector grew from US$ 97 million during the period April 2012-March 2014, to US$ 208 million in the period April 2014-March 2016, according to the government’s Make in India website. And this figure is projected to be US$ 228 billion by the end of 2020, growing at a rate of 16-23 per cent annually. The Ministry of Electronics and Information Technology (MeitY) also predicts a 17 per cent growth in the manufacture of electronic products and a 24-68 per cent growth in electronics manufacturing services (EMS) over the next five years.

But in spite of considerable success in the sector, there are also some serious challenges due to which the small and medium sized (SME) electronic component manufacturers are struggling. Although there are huge opportunities in ESDM for SMEs, hardly any initiatives have been put forward by the government to boost the sector, claim market researchers. A couple of years back, the Ministry of MSME claimed that there are about 30 million SME manufacturing units in India, which contribute about 45-47 per cent of India’s industrial output, 42 per cent of the country’s total exports, adding up to 37 per cent of our GDP, while employing over 60 million, which is over 66 per cent of the 80 million people employed within the Indian manufacturing sector. Industry or the manufacturing sector employs about 22 per cent of the country’s total workforce, the size of which is estimated to be between 430-470 million. The SME sector creates more than 1.3 million jobs every year and produces more than 8,000 quality products for the domestic and international markets.

Though there are dozens of initiatives and policies that have been initiated by the government, these have not been implemented well and so MSMEs in the country are still struggling. Market researchers opine that to make Indian MSMEs stronger, it is imperative to extend programmes like Modified Special Incentive Package Scheme (MSIPS). According to electronicsb2b’s exclusive report, the biggest problem for MSMEs is getting an electricity connection, which takes almost seven to eight months of time. This is crippling, because electricity is the most important requirement for any kind of industrial activity.

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