In the early days of the Industrial Revolution, a single invention changed the world: the steam engine. This marvel of engineering powered factories, drove progress and transformed economies. The steam engine symbolised a nation’s ability to innovate, produce, and lead. Today, India stands at a similar crossroads with its capital-goods industry, especially in the realm of electronics manufacturing. The industrial countries of East Asia did not invest in machinery by chance. Their investments were driven by export-oriented strategies and demands of international competition. To seize this moment, we must harness the same spirit of innovation that fuelled the Industrial Revolution.

India’s electronics production has reached an impressive milestone of approximately $115 billion in FY24, growing by almost four times in the past decade. Projections for the next five years are even more promising, with expectations to multiply this figure by five times. Globally, the electronics market, currently valued at $4.5 trillion, is anticipated to soar to $6.1 trillion by 2030. These figures highlight an opportunity and a call to action for India to capture its rightful place on the world stage.

Central to this vision is the role of capital goods — machinery, tools, and equipment that drive production. Just as the steam engine was integral to the Industrial Revolution, advanced capital goods are essential for modern manufacturing. They enable us to produce high-quality electronics efficiently and at scale. Our focus should be on developing unique, cutting-edge solutions that serve both domestic and global markets. This demands a significant investment in research and development, supported by policies that encourage innovation and protect intellectual property rights.

Demand supply gap

Meeting domestic demand and targeting the export market are both essential. At home, there is an urgent need to close the gap between the demand and supply of capital goods. By bolstering our manufacturing infrastructure, we can reduce dependency on imports and ensure a steady supply of high-quality equipment for domestic consumption. As India aims to increase its electronics production by five times, the demand for advanced manufacturing technologies will also surge, necessitating a robust domestic capital goods sector.

To spearhead this initiative, there is a need for a dedicated centre with a substantive corpus of minimum ₹1,000 crore focused on innovation in capital goods, potentially housed at the Central Manufacturing Technology Institute (CMTI). Such a centre could drive the development of advanced manufacturing technologies and build capabilities essential for electronics and high-tech manufacturing. The CMTI can partner with industry leaders and academic institutions to foster innovation, streamline production processes, and enhance the overall competitiveness of Indian manufacturers.

Fostering R&D

India’s robust intellectual property protection can be a cornerstone of this strategy, creating a secure environment where new ideas can thrive. By promoting a strong R&D ecosystem, we can develop indigenous technologies that not only meet international standards but also set new benchmarks in quality and efficiency.

On the global stage, the aim is to position Indian companies as formidable contenders. This requires a strategic approach, including understanding global market dynamics, adhering to international quality standards, and building a reputation for excellence. The question then arises: why can’t India produce companies that rival the likes of ASML, the Dutch giant known for its advanced machinery?

Creating Indian champions that can compete with the best in the world involves several critical steps:

Prioritising the development and acquisition of advanced manufacturing technologies is crucial, supported by dedicated funds for acquiring and enhancing capital goods, including second-hand equipment. Investing in education and training programmes to equip our workforce with necessary skills, both technical and soft skills like problem-solving and innovation, is equally vital. Strong collaboration between industry and academia can foster innovation and ensure that research aligns with industry needs, leading to breakthrough technologies and processes. Additionally, government policies must support the growth of the capital-goods industry by providing incentives for R&D, facilitating ease of doing business, and ensuring a stable regulatory environment.

As the world moves towards sustainable manufacturing practices, India must adopt eco-friendly technologies and processes, enhancing our global competitiveness and positioning India as a responsible manufacturing hub. Embracing digital technologies such as AI, IoT, and big data can revolutionize manufacturing processes, making them more efficient and cost-effective.

Addressing technology and skill gaps is also critical for India’s ambitions in the electronics sector. Joint ventures with global leading firms can facilitate skills and technology transfer, while government programs to attract skilled diaspora and foreign experts can build domestic capabilities. Establishing a roadmap for developing key equipment and progressing to the most cutting-edge technologies, will be essential. This roadmap should focus on building expertise gradually, ultimately positioning India as a hub for advanced capital goods like the ASML.

Competitive cost of finance

Most importantly, making the cost of finance competitive is vital. Reducing the cost of capital can enable Indian manufacturers to invest more in technology and innovation, making them more competitive globally.

Reflecting on the Industrial Revolution, just as the steam engine drove progress, we now have the opportunity to drive our own industrial revolution through a robust and innovative capital goods sector. By fostering innovation, enhancing skill development, and creating a supportive policy environment, India can emerge as a leader in electronics manufacturing.

This journey requires a collective effort from the government, industry, and academia. If we harness our potential and approach this challenge with the same determination that powered the Industrial Revolution, there’s no limit to what we can achieve.

As the renowned poet Tulsidas eloquently said:

“कर्म प्रधान विश्व रचिराखा,