Globalise to Localise: Exporting at Scale and Deepening the Ecosystem are Vital to Higher Domestic Value Addition in Electronics

The study proposes that India should adopt the mantra of first globalise, then localise, a strategy also pursued by China and Vietnam. Implementing it will require two fundamental changes in the existing policy regime. First,the electronics sector should be able to source inputs from the lowest cost suppliers anywhere in the world until it achieves a global scale, which implies temporarily suspending localisation requirements, removing duties on intermediate items, and accelerating integration through bilateral and regional FTAs.Second, the priority of the industrial policy should be about creating a competitive domestic ecosystem of ancillary suppliers – by improving business climate, removing unnecessary regulations, helping with technology transfer and supporting services, training of workers, better sharing of market information, investment in R&D, and targeted fiscal incentives – through cooperative collaboration with the state governments and the private sector.