Electronics component manufacturing offers MSMEs huge opportunity to succeed: IT Secretary

Speaking at the CII MSME Growth Summit, S Krishnan also exhorted MSMEs to seize growth opportunities, adopt technology and digital tools to expand, and "graduate" to becoming a larger enterprise over time.

New Delhi: Electronics component manufacturing in India offers MSMEs a "huge opportunity to succeed", IT Secretary S Krishnan said on Wednesday asserting that Meity is looking at ways to spur the electronics components ecosystem in the country.

Speaking at the CII MSME Growth Summit, Krishnan also exhorted MSMEs to seize growth opportunities, adopt technology and digital tools to expand, and "graduate" to becoming a larger enterprise over time.

"You enter as a startup and try to exit within a reasonable time frame. So we should not have 'intergenerational' MSMEs anymore in this country," he said pointing to a slew of opportunities that technology today enables.

Krishnan said India's aspirations to transform itself into an electronics manufacturing destination are "extremely important" from employment, resilience, and exports viewpoint. Moreover, it ensures that quality products are available for domestic consumers in the market.

"There is a huge requirement for components and that component requirement is where I think MSMEs have a huge role to play and need to come into play, in a significant way," he said.

Not only does component manufacturing offer such companies a huge opportunity to succeed, but there is "also a national need to ensure that they succeed," he said.

Ministry of Electronics and IT (Meity) is looking at ways to promote greater manufacturing of electronics components in the country and is keen to encourage and enable companies of all sizes and scales in this space.

He cited the success tasted by India in mobile manufacturing saying the country now produces 33 crore mobile units and has a strong exports play, a "significant" feat compared to levels a decade ago when 21 crore mobile phone units were being imported in the country with manufacturing at a mere 5 crore units.

Krishnan, however, pointed out that while mobile phones manufactured and assembled now cater to almost all domestic consumption in the country, the value addition is only about 18-20 per cent.

"Today we have an advantage in terms of labour cost... the assembly of electronics units are heavily employment-oriented which is good...but for it to be continued to be based in India, we need to continue to be competitive," he said.

For electronics manufacturing to dig "deep roots in India" would require a significant proportion of components to also be manufactured here.

"Our goal is that value addition should double to 35-40 per cent in the next 5 years so we are able to take forward the component manufacturing ecosystem and there the role of MSMEs will be significant," said Krishnan.

Industry 4.0 and Artificial Intelligence are also important for MSMEs, he said adding that the adoption of new age technologies by smaller enterprises would be crucial for them to thrive and succeed.

IT Ministry has been running a series of initiatives and programmes that can be leveraged by MSMEs for tech infusion. Benefiting from the AI revolution and reaping productivity gains from it, may also require the 'retrofitting' of many manufacturing facilities.

"There is a huge opportunity for 'retrofitting' and that is something that needs to happen across MSMEs as well in terms of 'retrofitting' of equipment and allowing the latest digital technology to be applied, instead of completely replacing the equipment," he added.

Application of technology and digitisation holds a huge relevance for the MSME sector, in say, enabling faster credit appraisals from financial institutions and banks, or even aiding the marketing efforts of companies.