Govt to electronics firms: Upgrade engineering skills, develop design capacity

New Delhi: India wants electronics manufacturers to move beyond assembly, and has asked companies to build in-house product design capabilities and adopt global engineering standards, as the country aims to become a hub for deep-tech manufacturing and exports.

Union electronics and information technology minister Ashwini Vaishnaw on Monday gave companies 15 days to come up with clear product design plans and six-sigma engineering certification programmes, warning that failure to comply could result in incentives for approved projects being withheld or cancelled altogether.

“We’ll have to get into electronics, components and chip designs, which should be our primary focus. Anyone not making a move ahead will be weeded out—we will give the industry 15 days to come up with structured electronics design and six-sigma certification programmes. If any manufacturer fails, we may take them off the programme even if they are approved—or hold the incentives back," Vaishnaw said, as he approved 29 new component-making projects worth ₹7,104 crore.

Vaishnaw’s warning comes as the ministry of electronics and IT's (Meity) ₹40,000-crore electronics components manufacturing scheme (ECMS) to incentivize domestic manufacturing completed one year. In its first year, Meity approved a total of 75 electronic components projects in four tranches including Monday, which cumulatively promised net investments of ₹61,671 crore.

On 26 April last year, shortly after the ECMS was notified, Vaishnaw had said that approval of component projects would be contingent on manufacturers meeting targets suggested by the ministry for ramping up in-house design and six-sigma certification.

Six-sigma certification in engineering refers to a globally accepted level of engineering skills, seen as a universally accepted requirement for the electronics industry in selecting vendors.

“We will have to develop our own supply chain and have coordinated buyer-seller agreements. I want the electronics industry to organize such agreements once a month in a structured way. We also need structured six-sigma engineering certification programmes, and scale them up," the minister said. He added that for the first time, India became a net exporter in the electronics industry this fiscal. While Vaishnaw did not share an exact figure, data published by his ministry on 2 March said electronic goods were India’s second most-exported item, with the first half of this fiscal seeing exports worth $22.2 billion.

Meanwhile, industry stakeholders reacted positively to Vaishnaw’s warning. Sunil Vachani, co-founder and executive chairman at Dixon Technologies, told Mint that with the component manufacturing projects, the company expects domestic value addition to increase “from 18% right now, to 40% once the projects are live and operational.”

“We’re going to be doing all of the display module and camera module manufacturing in-house, which is derived from Dixon’s design-led engineering skills. The broad idea is that backward integration as a factor of our business will improve, therefore increasing local value addition. What impact this has on our books will remain to be seen going forward,” he said.

The government also wants a structured rise of certification courses for engineers in the industry.

“We need at least five different, focused training centres that will be able to train 5,000 to 10,000 people each. Otherwise, the quality of manpower will be an issue, as complaints will keep on coming. I am willing to take harsh measures and stop further approvals or disbursements, if the industry does not come up with commensurate efforts,” the minister said.

Puneet Agarwal, chief executive of Manesar-based VVDN Technologies, said that companies have been ramping up efforts to boost local manufacturing, and are willing to comply with policy requirements under Meity’s ECMS incentives programme.

“We are already conducting six-sigma training and certification programmes in-house for our existing engineers, and this is helping us ramp up push for a larger number of contracts from global brands. We have also been focused on design-led electronics engineering since the start, and are in line with the focus areas of the ECMS programme,” he said.

DIxon’s Vachani added that the company is “rolling out digital transformation initiatives, setting up centres of excellence for skilling, and tying up with universities to address the challenges of Industry 4.0.”

“The government has already done its part through policy frameworks. Now, the focus needs to shift toward designing products in India, and industry associations should now come together to chart a clear, structured roadmap for value additions in electronics manufacturing—something that will aid micro, small and medium enterprises as well,” Vachani said.

Dixon is India’s largest publicly-listed electronics manufacturer with a market cap of ₹58,792 crore as of Monday. The company has been approved for three ECMS projects so far, including a camera module manufacturing project approved on 2 January at a net investment of ₹550 crore, and a display module manufacturing project approved on Monday at a net investment of ₹1,100 crore.

Analysts welcomed Vaishnaw’s push for local value addition in the country's electronics ecosystem, which generated $120 billion in revenue last fiscal, as per Meity. Ashwini Aggarwal, country advisor at electronics industry body Society for Information Display (Sid), said that while “no country is completely self-reliant in electronics, the reality is that we need to have some control over key inputs. Until now, much of it was imported, but that story is beginning to change.”

“The government has played a strong role in creating the electronics ecosystem—from enabling software and tools to supporting the broader industry. These transitions take time, but the direction is clear,” Aggarwal added.