Introduction

In the early days of the Industrial Revolution, a single invention changed the world: the steam engine. This powered factories, drove progress, and transformed economies. The steam engine symbolized a nation’s ability to innovate, produce, and lead. Today, India stands at similar crossroads with its capital-goods industry, especially in electronics manufacturing. The industrial countries of East Asia did not invest in machinery by chance. Their investments were driven by export-oriented strategies and the demands of international competition. To seize this moment, we must harness the same spirit of innovation that fueled the Industrial Revolution.

India’s electronics production has reached an impressive milestone of about $115 billion in FY24, growing nearly four times in the past decade. Projections for the next five years are even more promising, with expectations to multiply this figure fivefold. Globally, the electronics market, currently valued at $4.5 trillion, is anticipated to soar to $6.1 trillion by 2030. These figures highlight an opportunity and a call to action for India to capture its rightful place on the world stage.

The Role of Capital Goods in Electronics Manufacturing

• Central to this vision is the role of capital goods—machinery, tools, and equipment that drive production.
• Advanced capital goods enable us to produce high-quality electronics efficiently and at scale.
• Our focus should be on developing unique, cutting-edge solutions that serve both domestic and global markets.
• This demands a significant investment in research and development, supported by policies that encourage innovation and protect intellectual property rights (IPR).

Bridging the Demand-Supply Gap

• Meeting domestic demand and targeting the export market are both essential.
• At home, there is an urgent need to close the gap between the demand and supply of capital goods.
• By strengthening our manufacturing infrastructure, we can reduce dependency on imports and ensure a steady supply of high-quality equipment for local consumption.
• As India aims to increase its electronics production fivefold, the demand for advanced manufacturing technologies will also surge, necessitating a robust domestic capital goods sector.
• To spearhead this initiative, there is a need for a dedicated center with a substantive corpus of a minimum ₹1,000 crore focused on innovation in capital goods, potentially housed at the Central Manufacturing Technology Institute (CMTI).
• Such a center could drive the development of advanced manufacturing technologies and build capabilities essential for electronics and high-tech manufacturing.
• The CMTI can partner with industry leaders and academic institutions to foster innovation, streamline production processes, and raise the overall competitiveness of Indian manufacturers.

Fostering Research and Development

• India’s robust IPR protection can create a secure environment where new ideas can thrive.
• By promoting a strong R&D ecosystem, we can develop indigenous technologies that not only meet international standards but also set new benchmarks in quality and efficiency.
• Globally, the aim is to position Indian firms as formidable contenders. This requires a strategic approach, including understanding global market dynamics, adhering to international quality standards, and building a reputation for excellence.
• The question then arises: why can’t India produce firms that rival the likes of ASML, the Dutch giant known for advanced machinery?

Creating an Indian Champion

• Creating such an Indian champion involves many critical steps.
• Prioritizing the development and acquisition of advanced manufacturing technologies is crucial, supported by dedicated funds for acquiring and enhancing capital goods, including second-hand equipment.
• Investing in education and training programs to equip the workforce with technical and soft skills is equally vital.
• Strong collaboration between industry and academia can foster innovation and ensure that research aligns with industry needs, leading to breakthrough technologies and processes.
• Additionally, government policies must support the growth of the capital-goods industry by providing incentives for R&D, facilitating ease of doing business, and ensuring a stable regulatory environment.
• As the world moves towards sustainable manufacturing practices, India must adopt eco-friendly technologies and processes, enhancing our global competitiveness and positioning India as a responsible manufacturing hub.
• Embracing digital technologies such as AI, IoT, and big data can revolutionize manufacturing processes, making them more efficient and cost-effective.

Addressing Technology and Skill Gaps

• Addressing technology and skill gaps is also critical for India’s ambitions in the electronics sector.
• Joint ventures with global leading firms can facilitate skills and technology transfer, while government programs to attract skilled diaspora and foreign experts can build domestic capabilities.
• Establishing a roadmap for developing key equipment and progressing to the most cutting-edge technologies will be essential.
• Reducing the cost of capital can enable Indian manufacturers to invest more in technology and innovation, making them more competitive globally.

Conclusion

India stands at the threshold of a new industrial era, with the potential to become a global leader in electronics manufacturing. By fostering innovation, investing in advanced manufacturing technologies, and building a robust capital goods sector, India can not only meet domestic demand but also establish itself as a formidable player on the global stage.