India can enhance electronic goods imports from Singapore, USA, Malaysia, Taiwan, More than 90% reliance on China seen in integrated circuits, television sets and other apparatus

MUMBAI, 23rd June 2020 (GNI): China is the largest supplier of goods to India as it contributes 14% to our total merchandise imports. At a time when India is reassessing its economic relations with China, MVIRDC World Trade Center Mumbai explored India’s integration with China in the supply chain of electronic goods, which is one of the focus sectors of Make in India.

In the electronic sector, India is heavily dependent on Chinese suppliers. Electronic goods account for 32% of India’s overall imports from China. China meets 40% of India’s total imports of electronic goods, which includes consumer electronics, industrial electronics, computer and IT hardware, mobile phones, strategic electronics, light emitting diodes etc.  India imported Rs. 3.59 lakh crore worth of electronic goods from the world during April-February 2019-20 and out of this, imports from China stood at Rs. 1.42 lakh crore or 40% of total imports.

Specifically, India imported 98% of parts used in electronic integrated circuits and micro assemblies from China. Similarly, our reliance on China was 93% in colour television sets of certain screen size (see the table below). China met 90% of India’s import demand for subscriber end equipments (used in telecom industry).  The following table provides the list of key electronic goods imported from the world and China. Goods that are procured more than 80% from China are highlighted in pink.

Although India’s overall imports of cell phones (see HS Code 851712) has declined sharply in 2019-20, the share of China increased in total imports. India’s imports of cell phones almost halved to Rs. 6313 crore in April-Feb 2019-20 compared to Rs. 11304 crore in the full year of 2018-19. Decline in imports may be attributed to increase in domestic manufacturing and hike in import duty on mobile handsets in recent years. Imports from China also declined from Rs. 6265 crore in 2018-19 to Rs. 4717 crore in April-Feb 2019-20. However, the share of China in overall imports grew from 55% to 75%.

Alternative Suppliers

In case India seeks to reduce its reliance on China for electronic goods, it can do so by increasing imports from other top exporting countries. India can pursue this strategy of import diversification until such time our indigenous production of electronic goods picks up.

Speaking on the potential for domestic production of electronic goods, Ms. Rupa Naik, Senior Director, MVIRDC World Trade Center Mumbai said, “Between 2014 and 2020, India’s production of electronic goods has grown at an impressive CAGR of 20.6%, significantly higher than India’s nominal GDP growth of 11-12% during this period. There is tremendous potential for electronic manufacturing in India, given the progressive policy thrust and vast consumer market.” 

India’s total electronic goods production grew to Rs. 5.33 lakh crore in 2019-20 from Rs. 1.73 lakh crore in 2013-14. These electronic goods include consumer electronics, industrial electronics, computer hardware, mobile phones, strategic electronics, electronic components and light emitting diodes.     

In recent years, Government of India introduced various programmes, including production linked incentives, Electronic Manufacturing Clusters, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and M-SIPS to promote indigenous manufacturing of electronic goods.

Until such time these schemes result in increase in domestic production, India can diversify its imports of electronic goods away from China. For instance, India can source integrated circuits from Singapore, USA, Malaysia and Japan, which are the other prominent exporters of these goods after China. India can increase its import of colour television sets from Malaysia, Vietnam, Singapore and USA, that are the other top suppliers of this product after China.

For meeting demand for subscriber end equipments (that are used in telecom industry), India can enhance imports from Singapore, Taiwan, Germany, Israel and Japan.  India can diversify import of non automatic voltage regulators and stabilizers by sourcing from Singapore, USA, Italy and Denmark. The following table highlights the leading exporters of these electronic goods.

Alternative sources of imports for electornic goods

HS Code

Product Description

Leading exporters (other than China)

85177090

OTHR PARTS OF TELEPHONC/TELEGRPHC APPARTS

Vietnam, South Korea, Taiwan, Japan

84713010

PERSONAL COMPUTER (LAPTOP,PALMTOP,ETC)

Singapore, Hong Kong, Taiwan, Malaysia

85414011

S0LAR CELLS/PHOTOVOLTAIC CELLS WHETHR OR N0T ASSEMBLED IN M0DULE/PANEL

Vietnam, Thailand, Singapore, Taiwan

85429000

PARTS OF ELECTRONIC INTGRTD CIRCTS AND MICRO ASSMBLIES

Thailand, USA, Singapore, UK, Chile

851712*

TELEPHONES FOR CELLULAR NETWORKS

Vietnam, Singapore, Hong Kong, South Korea

85076000

LITHIUM-ION

Vietnam, Japan, South Korea, Malaysia

85079090

OTHER PARTS

Vietnam, Malaysia, USA, Germany

85182200

MULTIPLE LOUD SPEAKERS; MOUNTED IN THE SAME ENCLOSURE

Malaysia, UAE, USA, Italy

85287215

COLOUR TV SET OF SCRN SIZE BETN 74 AND 87 CM

Malaysia, Thailand, Singapore, Germany

85184000

AUDIO-FREQUENCY ELCTRC AMPLIFIERS

Germany, UAE, USA, Thailand, Singapore

85176950

SUBSCRIBER END EQUIPMENT

Singapore, USA, Germany, Taiwan, Malaysia

85229000

OTHR PARTS AND ACCESSORIES OF HDNG 8519-8521

Philippines, Malaysia, Singapore, Thailand

85442010

CO-AXIAL CABLE

Germany, Vietnam, Malaysia, USA, Singapore

85044040

NON AUTOMATIC VOLTAGE REGLTOR AND STABILZR

Germany, Singapore, Belgium, USA

85185000

ELECTRIC SOUND AMPLIFIER SETS

Taiwan, Singapore, Canada, USA

85271300

OTHER APARATUS COMBIND WTH SOUND RECORDNG OR REPRODUCNG APARATUS

South Korea, Malaysia, USA, Japan, Germany

Source: Ministry of Commerce, GoI

Note: Although Hong Kong is the leading exporter of many of these goods, the country is not mentioned in this list

While the above mentioned countries are leading exporters of these electronic goods, it is not clear whether they are on par with China in terms of cost competitiveness and delivery timelines. Even if these alternative exporters are less competitive, it is still advisable for Indian companies to diversify their imports away from China as a matter of prudent supply chain management. A major lesson from the COVID crisis is that companies should not depend entirely on single source of supply. Also, import diversification will benefit India by reducing its trade deficit with China.ends