India’s electronics manufacturing is on a remarkable growth trajectory, with the country’s electronics production expected to reach $500 billion by 2030 from $155 billion in FY’231. This remarkable growth is driven by strategic government policies, rising domestic demand and India’s proliferating role in the global electronics supply chains, demonstrated by the growing success of global giants like Apple which have increasingly integrated India into their manufacturing and sourcing strategies.
These ambitious targets are well-founded, reflecting the exceptional growth and performance that the electronics manufacturing sector in India has already demonstrated. India, today, is focused on strengthening its domestic ecosystem of components and raw materials, an ecosystem that will position India as the preferred destination for global investments.
“As India continues to build its domestic electronics ecosystem, an orderly growth would necessitate a three-pronged approach namely, manufacturing (and thereby enlarged employment), value addition (associated cost benefits) and domestic capability enhancement (technological enhancement). This would lead to reduced dependence on global supply chains, which in turn, will shield manufacturers from the challenges of predatory pricing and foster sustainable growth” says Vinod Subramanian, Vice President – Technology and Telecom, Invest India.
The often-overlooked but a crucial passive component - capacitors - would play a large part in building this local ecosystem in India. They are the foundation of an electronic circuit and the magic lies in their functioning like a battery - both storing and releasing energy.
The role of these miniature marvels cannot be underestimated as these are essential across all segments, such as automobile, smartphones, consumer durables and industrial equipment to name a few. Especially, in the realm of printed circuit board (PCB) manufacturing, capacitors serve as the unsung heroes of electronic functionality. To put this importance in perspective, a smartphone on an average has approximately 500, a tablet or a notebook consists of close to 700 and a TV consists of ~1,000 capacitors.
Traditionally, Japan, Taiwan, Korea, China and the US have controlled, managed and accelerated the growth of these components globally. A closer look at the global expansions from these global leaders highlights an investment size ranging from $70 – $300 million generating an asset turnover ratio of 1:1.5 – 2 over a payback period of approximately six years.
| Company (HQ Country) | Invested in | Investment Amount (USDmn) |
|---|---|---|
| Murata Manufacturing (Japan) | Vietnam | 67 (2023) |
| Kyocera Corporation (Japan) | Thailand | 300 (2022) |
| Yageo Corporation (Taiwan) | North Macedonia | 222 (2023) |
| Taiyo Yuden (Japan) | Malaysia | 140 (2021) |
However, the Indian industry is quickly gaining ground. Accelerated by government initiatives like Make in India and the recently launched Electronics Component Manufacturing Scheme (ECMS) by the Ministry of Electronics and Information Technology, India has the potential to become the global manufacturing and export hub for these capacitors. The demand for these non-polarised, high-reliability, small size, low cost capacitors is set to soar and some of the Indian players are set to take the lead.
Cutting-edge innovation:
While capacitors are indispensable in modern electronics, one such type of capacitors that has gained significant traction and unprecedented growth in the advanced electronics ecosystem are the multilayer ceramic capacitors, popularly known as MLCCs. Principally because MLCCs are reliable, affordable, efficient, compact and yet, demonstrate high capacitance which makes these the obvious choice for high frequency applications.
The market for ceramic capacitors is expanding in tandem with the growth of the global semiconductor market. Globally, the proliferation of smartphones, tablets, laptops, wearable devices and other consumer electronics has led to a surge in the demand for MLCCs. Market projections reflect this positive outlook, with many analysts forecasting steady growth in the global capacitor market over the coming years.
A closer look at the leading MLCC players globally and their market share.
Why India?
India has emerged as the world’s second-largest smartphone manufacturer, with its production valued at approximately $50 billion in FY’232. It has also become the second-largest market for 5G smartphones, surpassing the United States.
This impeccable performance of the smartphone industry in India would be replicated by the automotive and communications sectors that would be the significant demand drivers for MLCCs.
The growing use of electronic components and advanced driver assistance systems (ADAS) in the automotive industry, coupled with widespread EV manufacturing, will contribute to a rising demand for MLCCs in automotive applications. The need for MLCCs in automotive power electronics is also projected to increase further. The worldwide deployment of 5G networks would further accelerate the need for MLCCs in telecommunications infrastructure, such as base stations, antennas and network servers, due to their reliability, stability and ability to manage high-frequency signals effectively.
Another key segment expected to augment this demand is the growth of the Internet of Things (IoT) and connected devices. MLCCs are crucial for IoT applications, including smart home devices, industrial automation, healthcare monitoring and smart infrastructure, as they offer efficient energy storage and noise reduction.
As a sunrise sector, electronics manufacturing is set to contribute the lion’s share—30% of the incremental Gross Value Added (GVA)—that the manufacturing sector is expected to generate by 2030. With India advancing rapidly in technology and manufacturing capabilities, it is vital for global leaders to invest in cutting-edge technologies to achieve scale within the country.
As the Government of India develops new incentive structures to accelerate investments in the electronics sector, passive components would hopefully receive a significant share in the larger incentive pie primarily because of their critical role in ensuring the efficiency and performance of today’s advanced technologies.
”India's holistic vision to become the third largest GDP by 2027 and a $35 trillion economy by 20473 is inextricably linked to the growth of its electronics manufacturing sector. Building agile, reliable and flexible, domestic supply chains will be key to driving India’s electronics revolution, where the smallest components will have the profoundest impact on shaping the future of India's electronics industry,” concludes Subramanian.
India is poised for a transformative leap in electronics manufacturing and is set to play a significantly larger role in global supply chains. The time is ripe for global giants to seize this opportunity, invest ambitiously, and cement their position in the growth story of a nation fast advancing towards becoming a global powerhouse in technology and innovation.
This blog is written by Kashika Malhotra
