New Delhi: India may soon be able to cut down electronics exports substantially as the government expects investments worth $400 billion in local manufacturing over the next few years.

While investment in the India’s electronics manufacturing sector has not achieved its potential yet and current demand in the sector is valued at $100 billion, it is poised for a leap in the coming years, with investment worth over $400 billion likely to come into the sector in the coming years, R.S. Sharma, chairman of Telecom Regulatory Authority of India (Trai) and former IT secretary, said at Deftronics 2015 organised by lobby group India Electronics and Semiconductors Association (IESA).

Demand for electronics hardware is rapidly increasing in India and is projected to rise to $400 billion by 2020; domestic production is expected to reach $104 billion, creating a gap of $296 billion between demand and production, according to a report by Deloitte Touche Tohmatsu India Pvt. Ltd, a consultancy firm.

If India doesn’t move to reduce the widening gap, the country’s electronics import bill may surpass its oil import bill by 2020, some analysts have warned.

In line with the its flagship Make in India initiative, the government is also trying to push for domestic manufacturing in defence electronic by roping in private players.

“Defence is an industry where the government is the primary spender and it sets the rules. Of the entire demand, only about 30% is manufactured in India and that too by the public sector," said Shubhra Singh, joint secretary, department of industrial policy and promotion. “Defence sectors are dependent on DPSUs (defence public sector units). The only way to rewrite this imbalance is to bring in the private sector. To promote this, we need to create domestic base first."

The government has opened the defence sector by raising FDI from 26% to 49% in August last year.

“With Make in India bringing a new hope in indigenous manufacturing across sectors, Indian government aspires to domestically source 75% of the Indian armed forces’ hardware. This implies significant opportunity for Indian companies and global OEMs (original equipment manufacturers) to explore models of collaboration focusing on development of capability in India and of technology tie-ups," said Vinay Shenoy, chairman, India Electronics & Semiconductor Association. “This indigenization push is an opportunity for the private sector to significantly expand capability, and therefore capacity, by implementing global A&D (aerospace and defence) manufacturing standards and certifications."