Electronics manufacturing has emerged as one of the highest-growth sectors, attracting global markets and making India an unrivalled hub for contract manufacturing. Since the Covid-19 epidemic began, the demand for electronics and pharmaceutical things has only escalated.
In the next five years, the Indian contract manufacturing industry is anticipated to register a CAGR of 13.3% from 2023 through 2028. Moreover, the Indian electronic manufacturing sector is also expected to register over six-fold, from USD 23.5 billion in 2019-20 to USD 152 billion by 2025.
Due to its growth potential, the Indian government is vigorously pursuing policies and programmes to promote and accelerate the nation’s manufacturing sector.
With ample raw material availability, a young labour force, and a sizable talent pool with manufacturing and entrepreneurial skills—India is likely to become a global contract manufacturing powerhouse.
In this blog post, we discuss why India is emerging as a go-to destination for many companies.
Why Are Companies Choosing India As a Hub for Electronic Contract Manufacturing?
India stands out as a beacon of opportunity in the rapidly changing environment of global electronic manufacturing for Original Equipment Manufacturers (OEMs) seeking economic and strategic advantages.
Beyond its labour and production cost advantages, India provides a wide range of resources that can meet the complex requirements associated with modern electronics manufacturing.
India’s reputation as a centre of electronic manufacturing has significantly increased because of several factors listed below.
1. Competent Resources and A Skilled Workforce
OEMs are drawn to India for reasons other than its financial advantages. India offers a variety of strategic advantages in addition to its strength in human resources and manufacturing. These include a wide range of qualified workers with engineering knowledge, design expertise, and cheap labour.
Notably, India has a workforce competent in English, which increases its appeal for contract manufacturing. This linguistic advantage, skill and affordability position India as a compelling choice for OEMs looking for value and expertise.
Therefore, India emerges as a multifaceted destination that is not just defined by its economic advantages but also by its comprehensive provision of skilled labour, business know-how, and global connections, enhancing its prominence in the industrial and technological sectors.
2. Improved Ease of Doing Business and Professional Capabilities
Beyond technical proficiency, the increased efficiency of managing governmental processes is another significant benefit. International investors have had challenges conducting business due to bureaucratic roadblocks.
However, the environment appears to have changed due to the Indian government’s relentless efforts. By streamlining administrative processes and reducing regulatory complexity, relationships with governmental resources have been made more accessible.
In turn, this has sped up the establishment of manufacturing facilities and reduced potential areas of friction for OEMs looking to enter the Indian market.
3. Effective Sourcing of Raw Materials
India is already widely considered a top location for effective sourcing of raw materials due to numerous benefits. These include quick access to resources, efficient production techniques, a skilled workforce, and robust export systems. India’s cost advantage makes it profitable for foreign investors to use its resources, boosting the attraction by ensuring an alluring return on investment.
The diversity of India’s natural resources adds to its appeal as a reliable provider, satisfying the demands of the global manufacturing sector. India is becoming increasingly popular as a key supplier of materials for other nations because of these appealing qualities.
This confluence of factors solidifies India’s position as a reliable sourcing hub and highlights its crucial contribution to the development of the global supply chain by providing sustainability and resilience.
4. Empowering Supply Chain Resilience
India’s environment for electronic contract manufacturing has changed substantially, with a thriving market for precision components and innovative raw materials. This innovation serves aerospace and healthcare sectors that require high-tolerance components. Innovation in raw materials helps India meet the demands of many industries and aligns with global sustainability goals.
Localised production of precise components and new materials allows businesses to navigate disruptions adeptly. Furthermore, the variety in sourcing options enhances supply chain resilience, decreasing dependence on single sources.
This dual strategy addresses the specifics of the sector and offers a robust response to supply chain concerns worldwide. India’s electronic manufacturing industry develops as a beacon of innovation, cost-effectiveness, and a reliable contract manufacturing sourcing hub.
5. Leading Subcontracting Hub
India’s rise as a major player in the electronic subcontracting market can be attributed to an amalgamation of favourable factors, such as incentivised government programs and the economic edge stemming from inflation-affected developed nations. Hence, due to these factors, OEMs are increasingly opting for India for contract manufacturing over other worldwide alternatives.
The development of India’s fresh sourcing capabilities also improves its competitiveness. India has become desirable, enabling international OEMs to grow, develop, and flourish.
The industry’s strong development trajectory cements India’s position as a critical partner for OEMs worldwide, further increasing the country’s reputation as a hub for corporate success and technical advancement.
Overall, India is establishing itself as a multifaceted location for electronic manufacturing, offering cost advantages, skilled labour, ease of doing business, efficient sourcing of raw materials, and supply chain resilience. Due to this comprehensive strategy, India is emerging as a significant participant in the global contract manufacturing market, especially for electronics.
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