Expectation from the Budget: What Dixon Technologies and the Electronics Sector Hope For

As India looks toward the future, the electronics manufacturing sector is experiencing significant growth. This is primarily due to government initiatives like the Production Linked Incentive (PLI) schemes, which have already transformed the landscape. Atul, Managing Director of Dixon Technologies, a leading player in the Electronics Manufacturing Services (EMS) space, has expressed optimism and outlined his expectations for the upcoming budget. Here's a closer look at what the company and the wider industry are hoping for.

The Key Focus: The Rollout of the Component PLI Scheme

Dixon Technologies and the broader electronics industry have been on a growth trajectory, driven by government support through various PLI schemes. Atul emphasizes that the next crucial step for the sector’s continued expansion is the rollout of the Component PLI scheme. This scheme is designed to enhance value addition and expand the component ecosystem, which is vital for ensuring that more devices are manufactured within India.

Currently, India’s electronics manufacturing industry has achieved its initial goal of localizing the production of devices. The next frontier is improving the local supply chain for components, especially non-semiconductor components, which make up almost 50% of the bill of materials for electronic devices. Atul and other industry leaders are keenly awaiting the launch of this scheme, which is expected to provide critical support for the domestic component manufacturing sector.

Atul shared that the component ecosystem is key to taking the sector from $150 billion to nearly $500 billion over the next 6-7 years. If the scheme is rolled out effectively, it will strengthen the industry’s ability to meet global demand and reduce dependency on imports. This, in turn, would boost India's position as a manufacturing hub for electronics and other tech products.

Continuing Support for Mobile Manufacturing

Atul also mentioned that while the current PLI schemes for mobile phones have been successful, the sector still requires continued support to sustain growth. Mobile phones have already emerged as the second-largest export product for India. Atul noted that the PLI scheme for mobile manufacturing is set to wind down by 2025-2026, but there is still a need for handholding and tweaking of the policies to ensure that the sector remains competitive.

With mobile manufacturing showing strong export potential, companies like Dixon Technologies are optimistic about continued government support. Atul suggested that the industry would benefit from a continuation or extension of the current PLI scheme beyond 2026, which would provide long-term stability and enable further investment in mobile manufacturing.

Structural Strengthening of Existing Schemes

Beyond the PLI schemes, Atul pointed out that the electronics manufacturing sector, which is highly labor-intensive, would benefit from some structural strengthening of existing schemes. The need for job creation in this industry is immense, with Dixon Technologies having grown from a workforce of 2,000 people seven years ago to 35,000 today. Further support in terms of job creation, labor policies, and infrastructure development is essential to sustain the sector’s growth and provide adequate employment opportunities.

Atul’s company, Dixon Technologies, has already been expanding rapidly by setting up two to three factories each year. The continued support for labor-intensive industries like electronics manufacturing will ensure that India remains a key player in the global supply chain, while also providing jobs and contributing to economic growth.

Tweaks in Indirect Taxes

Another point Atul raised was the need for tweaking the indirect tax system to streamline operations for businesses in the electronics manufacturing space. With the industry growing rapidly, the operational complexities due to indirect taxes can sometimes become a hurdle. Simplifying the tax structure could ease business operations and ensure that the electronics industry operates smoothly, further boosting its contribution to India's GDP.

Positive Sentiment with Potential Announcements

Atul was optimistic about the government’s ongoing work on the component PLI scheme, with discussions already taking place and expectations that some announcement or positive indication could come through in the budget. While the final details of the scheme are expected to take some time due to required cabinet approvals, any signal or progress on this front would generate significant positive sentiment in the industry.

The anticipation around this scheme and the overall budget announcement has led to increased optimism in the electronics sector. Companies like Dixon Technologies believe that a supportive government stance, coupled with proactive policies, will continue to strengthen the sector’s position both domestically and internationally.

Conclusion: A Strong Future for India’s Electronics Manufacturing

As India prepares for its budget, companies like Dixon Technologies are eagerly awaiting further government support, especially in the form of a robust component PLI scheme. The hope is that the scheme will enhance value addition in the electronics manufacturing industry, help expand the component ecosystem, and ensure continued success for India as a global leader in tech manufacturing.

With the electronics industry on an upswing and key sectors like mobile manufacturing showing great promise, the government’s focus on structural support and job creation will be crucial in maintaining this growth. Any positive developments in the upcoming budget will provide a huge boost to the industry and will set the stage for continued economic growth in the years to come.