The push for electronics manufacturing may not generate as big a job increase as expected, industry executives say

New Delhi: The much-discussed financial support plan to build an electronics manufacturing ecosystem may not generate as many direct jobs as the expansion of the fast-growing sector. Urgent medical service (Manufacturing of electronic products (services) or assembly businesses, as most lower-level components and subassemblies require precision machinery and rely heavily on automation, industry executives said.

According to experts, the investment-to-employment ratio in the components sector is much lower than in mobile phones or other electronic products. Typically, 10 or more jobs are created in the electronic power management systems sector for every Rs 10 crore of investment, while in the components sector, the figure is around four. This lower number of jobs also requires more technical skills and cannot be replaced by the mass hiring seen on mobile phone assembly lines.

The debate around jobs comes against the backdrop of a meeting held by the government with industry stakeholders last week to discuss aspects of the financial package (possibly around Rs 40,000 crore) to build a component manufacturing ecosystem in India.

“Final assembly of products will always require more plant personnel. The more you go into value-added, the less labor will be needed,” an industry executive who was aware of developments at the meeting told ET.

There, India’s comparative advantage of having a larger workforce will not have much impact and may in fact create more disabilities in the system, the executive said. It is a place where India will be competing directly with countries like Taiwan and China, where the capital requirement is the same but the labor requirement is minuscule.

The government plans to link incentives to the number of direct jobs created by the industry, along with the additional investment and revenue generated by participants. The current goal is to create around 200,000 direct jobs in five years thanks to mobile telephony. FURTHER (production-linked incentive) scheme that ends in fiscal 2026. The industry has asserted that while the components ecosystem will generate direct jobs, the quantity and competition required will be different from what is required under PLI schemes for mobile phones and IT hardware. “Due to their precise nature, both sub-assemblies and components that go into a mobile phone require a high level of automation. Components require more automation, sub-assemblies perhaps less,” a second industry executive also present at the meeting told ET.

The executive explained that display subassemblies or modules, motherboards and even the casing require very precise manufacturing involving high-tech machinery, which requires trained technicians to operate. This is even more so for components such as transistors, capacitors and PCBs where it is almost entirely automated.

“Today, in EMS, the staff ratio is about 80-20, with more staff than technicians. But for subassemblies, more technicians will be needed. Associates or operators will account for about 50%, skilled technicians for about 30%, and plant staff for about 20%. For components, the staff needed will be the same, but technicians will account for 50% and associates for about 30%,” he added.

The executive agreed that the plan should consider linking subsidies to jobs. “While they are linked to output, which is a measure of productivity, it is also important to have incentives linked to employment, which can be a third type of incentive that the government could offer as part of the package,” he said.