“INDIA’S PATH TO GLOBAL VALUE CHAINS:
LEVERAGING ESDM STRENGTHS AMIDST COMPETITION FROM CHINA, TAIWAN, AND VIETNAM”
The article examines the opportunities and challenges for India to make it big in GVCs in ESDM sector.
India’s focus on the Electronics System Design and Manufacturing (ESDM) sector has yielded significant achievements, including the substantial export of mobile phones, notably iPhones, from India. As India aims to become an integral part of the global value chains (GVCs) in the ESDM sector, several strategies, challenges, and opportunities emerge, especially in comparison to established players like China, Taiwan, and Vietnam.
Opportunities
Component Manufacturing and Semiconductor Development: India’s efforts to bolster component manufacturing and semiconductor development are critical. Government initiatives such as the ProductionLinked Incentive (PLI) scheme and the establishment of semiconductor fabs can attract global giants to set up their manufacturing bases in India. Skilled Workforce and Innovation: India’s
large pool of engineering talent and growing emphasis on skill development can support advanced manufacturing processes. The National Skill Development Corporation (NSDC) and similar programs are pivotal in this regard.
Strategic Partnerships and Investments: Encouraging strategic partnerships with leading global firms can facilitate technology transfer and innovation. Investments in R&D hubs and fostering collaboration between industry and academia will further strengthen India’s position.
Market Potential: With a massive domestic market and increasing digital penetration, India presents an attractive destination for global ESDM companies looking to expand their footprint.
Challenges
Infrastructure and Supply Chain: India needs to significantly upgrade its infrastructure to meet the demands of high-tech manufacturing. Efficient logistics and a robust supply chain are essential for
integrating into GVCs.
Regulatory Environment: While India has made strides in improving its business environment, further simplification of regulatory processes and ensuring policy stability are crucial to attract long-term
investments.
Technological Upgradation: Continuous technological advancement and upgradation are necessary to keep pace with global standards. This requires sustained investment in R&D and innovation.
Skill Gaps: Despite a large workforce, specific skill gaps in advanced manufacturing technologies need to be addressed. Initiatives like the Skill Census can help in identifying and bridging these gaps.
Comparative Analysis with China, Taiwan, and Vietnam
China: China remains a global leader in the ESDM sector, with well-established infrastructure, extensive supply chains, and substantial R&D investments. The country’s ability to rapidly scale production and its
dominance in the semiconductor manufacturing industry make it a tough competitor. However, rising labor costs and geopolitical tensions provide an opportunity for India to attract manufacturers seeking diversification.
Taiwan: Taiwan is home to some of the world’s leading semiconductor companies, like TSMC, and has a robust ecosystem for electronics manufacturing. Its advanced technology and strong IP protection give it a competitive edge. India can learn from Taiwan’s focus on high-value manufacturing and aim to establish similar centres of excellence.
Vietnam: Vietnam has emerged as a strong contender in the ESDM space due to its cost-competitive labor market and favourable trade policies. Its proximity to major markets in Asia and a business-friendly
environment have attracted significant foreign investment. India, with its larger domestic market and skilled workforce, can position itself as a complementary hub in the region, particularly for higher-end
manufacturing and R&D.
India
Andhra Pradesh is strategically positioned to contribute to India’s ESDM sector growth and integration into Global Value Chains (GVCs) due to several factors:
Proactive Government: The state of Andhra Pradesh lead by visionary leader Shri. Nara Chandrababu Naidu Garu and under the supervision of energetic Mr. Nara Lokesh Garu, Minister of HRD, IT, Electronics, Communications & RTG has demonstrated commitment and will be playing a major role in making this happen.
Coastal Advantage: Its extensive coastline provides access to ports, facilitating efficient import of raw materials and export of finished goods, crucial for ESDM sector operations.
Industrial Infrastructure: The state has developed industrial parks and Electronics Manufacturing Clusters (EMC) conducive to ESDM manufacturing, offering ready-to-use infrastructure for investors.
Skilled Workforce: Andhra Pradesh boasts a large pool of engineering talent, and skilled manpower, vital for high-tech manufacturing.
Proximity to Markets: Its strategic location allows easy access to major domestic and international markets, facilitating distribution and market penetration for ESDM products.