EU deal to open $750 bn electronics market for Indian manufacturers
The trade agreement creates a strong path for growth in line with India’s strategy to increase its electronics exports. They added that the landmark agreement also includes mutual recognition of certifications that will shorten qualification cycles and ensure that Indian-made products meet European criteria.
Sunil Vachani, chairman and managing director of Dixon Technologies, said that sectors such as LED televisions, LED lighting and home appliances will see the most significant benefits under the agreement.
Unlike IT hardware, which already enjoys lower taxes, these categories were facing higher tariffs (TVs were at 14% duty, lighting at 3%), which is now expected to be rationalized to zero duty under the agreement, opening up market access for the contract manufacturer, Vachani said.
Vachani said that the contract manufacturer, which had not previously exported to the EU, is now considering creating marketing networks and capabilities to enter this new market in the short and medium term.
Tariffs for other products such as smartphones, tablets and IT hardware were already low. But experts said the deal will now help local companies diversify their markets, facilitating easier access to European markets.
Currently, India’s electronic trade with the European Union stands at around $18 billion, according to the Cellular and Electronics Association of India, an electronics lobby group that represents leading mobile phone brands and manufacturers such as Apple, Xiaomi and Dixon. ICEA estimates that “with effective implementation of the FTA and deeper integration into EU-led global value chains, electronic commerce could grow to US$50 billion by 2031 and over US$100 billion by 2035.” Under the free trade agreement, 99 percent of Indian exports by value are expected to receive privileged access to the EU market.
As a result, the agreement is also expected to encourage European companies to support manufacturing and sourcing operations in India. “Reducing trade disputes and improving regulatory alignment can support deeper industrial cooperation between electronics, semiconductors, semiconductor manufacturing equipment, capital goods and other advanced manufacturing sectors,” ICEA said.
The Electronics and Semiconductor Association of India, which represents the country’s growing semiconductor footprint, said it expects capital goods, including high-end machinery, can be imported at cheaper cost, which could help reduce project costs.
“Duties on imported machinery such as lithography equipment, sheet cutting tools and automatic testing equipment are expected to fall to zero from the previous high levels of 40-44%,” IESA President Ashok Chandak said. This will be a big boost for the semiconductor fab and OSAT sectors as India imports all these machines from other countries.
Chandak added that there is a strong opportunity to integrate into the European supply chain in the field of automotive and industrial electronics. Companies like Bosch, Continental and Schneider have a manufacturing presence in the EU, creating demand for India-made components such as PCBs and connectors.
“With India’s electronics exports to the EU currently standing at around US$12 billion, privileged access to the EU’s approximately US$750 billion electronics market creates a strong path for growth aligned with India’s strategy to increase its electronics exports. As the ECMS and OSAT projects scale, they will create a much more conducive environment for high-value electronics and semiconductor exports,” Chandak said. he said.
