India's reliance on China increases as electronics production grows

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

Amid global supply chain diversification, India keeps attracting investments from global and local manufacturers. However, India's growing electronics production comes with a rising reliance on China.

The Korea Economic Daily reported that LG Electronics planned to build a new production line in India to capitalize on the rising disposable income of the population.

The report quoted an unnamed LG official revealing the plan without elaborating on the location of the new manufacturing facility. LG has a compressor production facility in Noida, Uttar Pradesh, and another for refrigerator manufacturing in Pune, Maharashtra.

According to the report, LG is looking to expand sales for its premium products in India. GfK data shows that LG is the top brand in LED TVs, washing machines, microwaves, and compressors.

Besides the influx of investments from global manufacturers like LG, local EMS providers also benefit from the trend, as Dixon Technologies saw an explosive rise in orders. Dixon CFO Saurabh Gupta told Al Jazeera that there is a lot of tailwind for the industry with global brands looking at a China-plus-one, even China-plus-N, strategy.

Thanks to a huge market and a shift in the global supply chain resulting from the pandemic and the US-China geopolitical tensions, India's electronics production has been expanding in recent years.

According to Indian customs data, India saw its communication device exports rise from US$843 million in 2015, when Narendra Modi launched the "Make in India initiative," to US$12.6 billion in 2022 at a CAGR of 40.27% for the period, with mobile phones leading the momentum.

Still, as India's electronics production grew with increasing capacities, the country also saw rising reliance on imports from China. Official trade data shows that India's imports of semiconductors rose from US$1.57 billion in 2015 to US$16.1 billion in 2022, with those from China accounting for 30% of the imports, as assemblers in India require semiconductors from overseas for assembling products when there is an absence of chip supply in the South Asian country.