Talk on Electronics, Trade and Geopolitics

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As a part of Science and Technology (S&T) series, the VIF organised a talk by Shri Virat Bhatia, Managing Director, Apple India, who spoke on “Electronics, Trade and Geopolitics” at the VIF on 21 September 2023. The talk was followed by a discussion with government officials and strategic community. In his opening remarks, Director, Dr. Arvind Gupta underscored the growing significance of electronics, trade and the ongoing geopolitics around these. Currently, from decoupling to de-risking is taking place which reflects the changing world order where geopolitics comes in. The geopolitics of course driven by not just military factors, but also many other factors including electronics and trade. India’s share in global trade is about two and half percent. Today, a lot of trade takes place in commodities, but also in S&T. For increasing its share in global trade, India needs to expand its consumer goods including electronics, one of India’s weaknesses and China’s strength.

In this context, Mr. Bhatia’s talk focussed on the importance of electronics and how the changing geopolitics is affecting the electronics manufacturing and trade. Particularly, he highlighted the electronics manufacturing in China and Vietnam, and how the increasing manufacturing of electronics has led the global dependency on these two countries. Vietnam has expanded its presence over the last one decade. He underlined that the world increasingly buys electronics, which is world’s most traded commodities with a total value of over US $2.3 trillion. The demand is ever growing for electronic goods, though services are important. India has strength in services, but needs to expand its presence in manufacturing sector.

The discussion focussed on the opportunity for India to become a global hub for electronics manufacturing and exports building supply chains. It highlighted the competitive challenges that the Indian companies face from China and Vietnam. At the same time, there are opportunities arising out of the changing geopolitical realignments on the one hand, and politics of technology on the other hand. The discussion focused on India’s performance so far, its current strengths as well as weaknesses of competing economies. It explored the potential for electronics exports, job creation, value addition and its impact on Gross Domestic Production (GDP) growth.

India, which aims to achieve self-sufficiency in electronics and reduce dependency on China, is taking substantial steps towards many key policy objectives. The ultimate objective is to shift the Global Value Chains (GVCs) and develop world’s dependency for electronics products on India. For realizing this goal, it needs to build large companies. By building MSMEs alone, it cannot shift the global GVCs. It was pointed out that China is most likely to lose 50% of labour intensive value addition, where India can build its strength to become integral part of the GVCs.

It was emphasized that India’s electronics sector prowess should be driven by the Indian champion companies. It needs to reform its education system to build technical knowledge base in collaboration with global tech companies. It needs to raise its education standards to upscale its competitiveness. It was also noted that Indian companies are risk averse where they seek financial support from the government, but they, unlike many other countries like the US, are not investing to build big companies of their own. Private investment is very important, which is very minimal in India. There is need to change the mindset on this as well.