STRATEGY FOR THE DEVELOPMENT OF INDIAN COMPONENT INDUSTRY

With the liberalization of industry and economy, Indian electronics in dustry is expected to undergo major changes. Electronic components are the basic building-blocks and therefore their local availability is o f great significance for achieving a meaningful growth in this sector. In fact, almost all electronics dominating countries world over have first strengthened their component base before undertaking a major har dware export. Encouraged by the large growth of consumer electronics i n early 80's and favorable fiscal and industrial policies, the compone nt sector attracted very large investments in late 80's. However, due to comparatively slow growth in other equipments sector, investments i n many key areas were completely left out resulting in skewed investme nt pattern. Over dominance of the development in TV industry and assoc iated components has masked the otherwise weak component base characte rized by fragmentation and under-utilization of capacity. Little inves tments have been made in major area of semiconductors and SMDs. All cr itical and key components including system based components have recei ved very small attention. The present report critically analyses the o verall development with a view to identify the strengths and weaknesse s of the indigenous industry. It is noted that while a good base for l ow and medium technology areas have been built, for high and advanced technology products India will have to largely depend on imports becau se so far no reasonable investments are on the grounds. Another weak s pot is the Surface Mount Components (SMDs) which are now being increas ingly used both in consumer and professional equipment. It is estimate d that imports of components in medium term will continue to be around 40 per cent of the demand mainly due to lack of investments. It is ex pected to increase further due to import liberalization and lowering o f tariffs. therefore, while the basic thrust of the policy may continu e to be on global competitiveness and exports, containing imports both at component as well as parts and raw materials level should be an es sential element of future growth strategy.