India targeting 15-20% share of global electronic GVCs by FY26: MoS IT

Chance for India to be an export-driven manufacturing hub, says Rajeev Chandrasekhar

Rajeev Chandrasekhar, Union minister of state for electronics and information technology (IT), talks about the country’s vision for electronics and deep tech, the shift in manufacturing to exports, and how policy challenges are being tackled, in an interview with Surajeet Das Gupta and Ashutosh Mishra in New Delhi. Edited excerpts:  

You have targeted electronic production to hit $300 billion by FY26. The mobile device production-linked incentive (PLI) has exceeded expectations, having crossed targets on exports and production value. The Budget earmarks over Rs 6,000 crore for it in FY25. What is the final goal?    

I think we are firmly now entrenched in the electronic global value chains (GVCs) and this is an important statement because in 2014, we were invisible and had no presence. Nobody in 2014 would have ever envisaged — after the Nokia fiasco, after allowing unfettered Chinese imports — that we would ever be a player. In the $1.5 trillion electronics GVC, China had a 70-75 per cent share. We had nothing. But in 2024, we are within shooting distance of the $300 billion target. Also, we are targeting a significant 15-20 per cent share of the electronics GVC by FY26 (assuming that the $1.5 trillion will also go up). 

Mobile phone manufacturing has become a beacon for other manufacturing. It signals that India can be a viable export-led manufacturing hub. Now, we are at a very interesting inflection point where manufacturing in India is moving from import substitution as the only primary goal to export-led growth.

One contentious issue is value addition. Today, Apple is at around 12-15 per cent and others are around 20 per cent. Will the next two years of PLI be crucial if you want to hit 40 per cent as stipulated under the scheme?

Value addition in electronics will never be determined on a per piece basis. It is driven as a gross value add because it is a volume game, like consumer electronics. For instance, China does $1.2 trillion production and exports of electronics. But it imports 600-700 million of components.

Our approach is to hit $300 billion of electronics manufacturing and target $60-75 billion of value add. Some economists who live in la-la land make the mistake of saying we only do services and not manufacturing. In consumer electronics, we have large volumes but per piece value add is low while in areas like servers, routers, telecom etc., value add is higher, so we have to look at an average.

Your target for mobile devices is to hit $130 billion value of manufacturing by FY 26. What is your expectation of gross value add in this segment?

I am pretty confident it will not be less than $15-20 billion.

Do you think value addition has to be redefined? 
 

There are a lot of gross value adds which are not added, like the entire logistics value chain being created, the value add created by new jobs leading to increased consumption, the services industry developing around these plants, value add from maintenance and repair, value created by the supply chain which set up units etc. That is the way to calculate digital value add.

What is the progress on semiconductors, after Micron? Will the over Rs 6,000 crore earmarked in FY25 be enough?
 

We are currently evaluating the first really credible fab proposal. And there is another in the pipeline. There are four compound semiconductor fab proposals being evaluated and three packaging proposals. There has been a significant uptick after the Micron plant was approved. Is Rs 6,000 crore enough? Prima facie, maybe not. But we can always go back and ask for more within the overall framework of $10 billion.

Global companies have been worried about making India a hub for exports, such as mobile devices, because input tariffs on components are high compared to China and Vietnam where they are virtually zero, making India globally uncompetitive. Is the finance minister’s decision to reduce tariffs on input costs just a day before the Budget a help?
 

The phased manufacturing programme was about import substitution and value addition. Now we are saying India has an opportunity to become an export-led manufacturing country. In tariffs, there is clearly a move from the finance minister to rationalise the duties for components on mobile devices in order to signal that we are ready to be a competitive export-led manufacturing destination like Vietnam or China.

In semiconductors, many OSAT companies, especially in Taiwan, are reluctant to come to India because of lack of stability in taxation and fears of punitive action on transfer pricing. Has this been taken care of?
 

This was the case leading up to Micron. In packaging, millions of wafers come in and tens of billions of devices go out. So, import-export being seamless, with no cost or with no impact on their business, is key. This was a concern raised repeatedly leading up to the first investment of Micron. But we have signed a multi-year API with them. All that has been done. The government moved very quickly. That is why we are getting so many semiconductor proposals.

In mobile devices you had talked of domestic global champions through PLI but that has not taken off. Why?
 

No, the government’s objective is that in every segment of electronics, we should have a mix of global giants and Indian giants. We had Indian giants but the unfettered entry of Chinese companies who played free and easy with Indian rules meant they cannibalised and basically knocked all the Indian players out of the market.

But now we are rebuilding them slowly. We are hand-holding them and I can predict today, at the risk of sounding like an astrologer, that in the next two-four years, you will see a lot of the existing Indian brands forge a comeback.

But do you see $300 billion in electronics achievable in another two years? Or $130 billion in mobile devices?

Whether we will hit it on April 1, 2026, or September 2026 or 2027, I have no way of knowing. There are many imponderables, including the so-called global recession.

What happens after the PLI if the disability between China and India continue? Will you extend the PLI scheme?

We are hoping the disability will not be there requiring this kind of incentive. We will cross that bridge when we come to it. But the fact that our goal to become a pre-eminent, trusted country in the electronic GVCs of the world remains absolutely unwavering.

On AI, there is a positive side alongside a huge concern about job losses. What is the government’s assessment?
 

While AI is certainly going to be disruptive for the technology workforce and the workforce in general, that does not automatically imply there is going to be joblessness. It just means there are going to be new jobs and new job roles that are going to be created, just as you saw in the wake of electronics and after computerization.

AI has the tremendous potential to do both good and harm. AI will be open and transparent. We will not allow any platform to control the internet, whether by market size or by access. We will not allow that kind of gatekeeping or creating islands of market power.

The second point is that regardless of who you are and what your platform is, whether you are Indian or foreign, small or big, AI or no AI, you are responsible for the safety and trust of our digital markets who consume your platform.

Third, this openness, safety and trust are not going to be just guidelines or self-regulation. There will be legal accountability. Just as we have used these three frameworks for social media and the broader internet, so we will apply them to AI.

Whether you are Google, chat GPT, whether you are being powered by AI, whether you are co-piloted by Microsoft, whether you are using Meta - you are responsible for ensuring that you legally, either as a platform or the user using your platform, do not do anything criminal on the platform.

Will you also look at whether what they are dishing out is authentic?
 

Yes. You are also responsible for any bias or incorrect training of any model that you are using to power your platform.

This will be a separate AI Act?
 

No, I don't think there is a need for any separate AI Act. We think that the Digital India Act and currently the IT Act with the IT rules is sufficient. When the Digital India Act comes, that certainly will have a much more expanded space for dealing with these emerging technologies and the harms that can come from them.

Do you see India becoming a big power for AI? There was a study that said India would be somewhere around 25th position?
 

I have absolutely no doubt that in three or four years, in technology, AI, semiconductors, electronic systems, in quantum and high performance computing, India will play a very significant role in shaping the future of all of them. We are not going to be mere spectators as we were for 30 years.

Will the Rs 1 trillion for deep technology announced in the Interim Budget be used for this?
 

The future of tech is being redrawn today and everything is back on the drawing board. What we knew for 25 years is being reset and redrawn. This $12 billion research and innovation fund will be among those scripting these re-drawings. Plus, the US, Japan, Korea and the EU want to work together and with India to put all our strengths together to get to the top, ahead of the race.

What happens after PLI if the disability between China and India continue? Will you extend the PLI scheme?
 

We are hoping the disability will not be there requiring this kind of incentive. We will cross that bridge when we come to it. But the fact that our goal to become a pre-eminent, trusted country in the electronic GVCs of the world remains absolutely unwavering.