Are electronic imports the new gold for the Indian economy?
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New Delhi: The obsession of Indian consumers with electronic items, chiefly mobile phones, seems to have trumped demand for gold, at least for now.
At $4.4 billion, electronic imports outpaced gold imports of $3.8 billion in April.
For the first 11 months of 2016-17 (April-February), gold imports contracted 24.5% to $23.1 billion, while electronic imports picked up 2.6% at a time overall imports fell 3.7%.
While the demand for electronics hardware in India is projected to increase to $400 billion by 2020, the estimated domestic production could rise to $104 billion only, creating a gap of $296 billion, which has to be met through imports, according to a report by Deloitte Touche Tohmatsu India Pvt. Ltd.
India imports 65% of its current demand for electronic products. If the situation is left unchanged, the country’s electronics import bill may well surpass its oil import expenses by 2020, the report says.
Electronic items are the third-most valued category of imports after petroleum products and gold. While India’s fascination for the yellow metal is well-established and the government, from time to time, imposes restrictions on it, at least part of this gold is re-exported in the form of jewellery which is not the case with electronic items.
India imports most of its electronic equipment, including smartphones, from China. According to commerce ministry data, import of phones and accessories grew from $665.47 million in 2003-04 to $14.3 billion in 11 months of 2016-17 till February. And most of it comes from China. Import of phones from China grew from a paltry $64.61 million to $10.1 billion during the same period.
Chinese-based smartphone makers have now captured more than half (51.4%) of the Indian smartphone market, according to the latest quarterly mobile phone tracker by International Data Corporation (IDC).
However, during April-February period of 2016-17 financial year, import of personal computers and laptops contracted 6.77% to $1.9 billion.
Aggressive push by the Indian government towards clean energy has also led to soaring imports of solar cells, part of electronic imports. Such imports jumped 34% to $2.5 billion during the 11-month period till February, $2.2 billion of which was sourced from China.
India’s solar power generation capacity more than tripled to 10,000MW from 2,650MW on 26 May 2014. The Narendra Modi government has set an ambitious target of generating 100GW of solar power by 2022. It aims to set up 50 solar parks with capacity of at least 500MW each or more across the country by 2019-20.
Anirban Sen contributed to this story.