Budget 2026: Policy support for electronics component manufacture crucial, says PWC

Kolkata: As India moves towards the government's over arching goal of attaining the status of a developed nation by 2047, the importance of technology sovereignty in building an ecosystem for resilient electronics and semiconductor manufacturing is rising constantly. Management consultant major PWC has set out its recommendations towards that end. The broad objective is to work out a space for India in the global value chain (GVC), says PWC. "A continued policy push towards electronic components and semiconductor manufacturing is critical to ensure supply chain ecosystem development, reducing lead times and improve reliability," PWC has stated in its pre-Budget note.

PWC thinks it is essential to incentivise the role of the MSMEs in India in the electronic components ecosystem. It has stated that MSMEs account for 25–35% of the industry and capital support along with continued access to advanced technology and skilled talent essential for this sector. "It is imperative to extend the focus from fabs towards development of critical input materials such as gases, chemicals, and substrates. Incentive support, infrastructure readiness. and promotion of long-term strategic partnerships will be essential to attract players who have the potential to supply domestically to Indian manufacturers, thereby enabling investors to save costs on logistics," said the consultant expert agency.

Identifying the factors that are important for semiconductor manufacturing, PWC said expertise in each of these linkages should be improved. "In line with the Government of India’s vision of building self-reliance in semiconductor manufacturing, in addition to critical utilities such as power supply and ultra-pure water supply, establishment of industry benchmarks across road infrastructure, cold-chain logistics for high-precision equipment, and transportation systems to handle high-purity gases is essential," PWC stated in the note.

Electronics is an area where R&D has a big role to play and in this connection, industry–academia collaboration assumes significance. "Incentives to raise R&D expenditure, IP development, and retention are required to increase technological advancement and industrial competitiveness, thereby enhancing industry–academia collaboration," it mentioned. Besdies this, the government should adopt a focused approach to develop a talent pipeline with establishment of dedicated training fabs and simulation facilities.

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The government is pursuing self reliance in manufacturing as a broad principle. PWC has said that to boost exports in electronics and semiconductor products the government can rationalise tax and duties and export subsidies. It is also important that businesses have access to low-cost capital and other support mechanisms.

There are 46 approved applicants under the Electronics Component Manufacturing Scheme. It can boost manufacturing in this sector. PWC mentions that there should be effective integration of tier-2 and tier-3 suppliers. On the matter of exports of electronics and semiconductor products, matters such as duty drawbacks, export subsidies are important. Also there is need to rationalise import duties on essential components, raw materials and equipment to reduce costs.