AIEA Submits Policy Roadmap to PM’s Economic Advisory Council Member Dr Shamika Ravi; Electronics MSMEs Seek Budget Push

New Delhi: In a significant policy intervention ahead of the Union Budget, the All India Electronics Association (AIEA) has submitted a detailed investment sentiment and reform roadmap to Dr Shamika Ravi, Member of the Economic Advisory Council to the Prime Minister and Secretary to the Government of India.

The document, titled India Investment Sentiment Survey – Executive Summary, outlines structural reforms and targeted incentives required to strengthen India’s MSME-led electronics component ecosystem, which AIEA described as the backbone of the country’s electronics manufacturing value chain.

The interaction was held as part of AIEA’s continued engagement with policymakers to ensure that grassroots industry concerns are reflected in national economic planning. According to AIEA, Dr Ravi received the recommendations positively and assured that they would be actively considered during upcoming Budget deliberations.

Electronics Sector at Strategic Inflection Point

AIEA’s submission highlights that India stands at a decisive inflection point in its industrial journey. While flagship initiatives such as the PLI scheme and semiconductor policy have attracted major investments, the association stressed that long-term success depends on building a strong domestic components ecosystem.

India remains heavily import-dependent — especially on China — for critical electronic components such as resistors, capacitors, connectors, relays, diodes and inductors. These low-value but mission-critical components are essential across sectors including telecom, defence, automotive, renewables, and consumer electronics.

“A semiconductor chip alone does not make an electronic circuit functional. Without a robust domestic components ecosystem, India’s ambition of becoming a global electronics hub will remain incomplete,” the note states.

AIEA emphasised that these products are best suited for MSME manufacturing, but current policies do not sufficiently differentiate between the needs of small manufacturers and large OEMs, discouraging grassroots entrepreneurship.

Tier-2 & Tier-3 Cities as Growth Engines

AIEA strongly advocated for electronics-specific industrial ecosystems in Tier-2 and Tier-3 cities, calling them India’s most under-leveraged opportunity for decentralised manufacturing.

The association recommended:

• Plug-and-play MSME industrial sheds

• Common testing and certification centres

• Shared logistics and warehousing infrastructure

• Electronics-focused skill development hubs

Such clusters, AIEA said, would naturally evolve into manufacturing hubs for connectors, wiring harnesses, relays, passive components and sub-assemblies — lowering costs and strengthening domestic supply chains.

Importantly, AIEA called for institutional parity between metro cities and smaller towns, demanding:

• Time-bound single-window clearances

• Reliable power and water supply

• Transparent land allotment systems

• Seamless road, rail and port connectivity

MSMEs Flag Ground-Level Challenges

While acknowledging reform intent, AIEA flagged serious execution bottlenecks:

• Continued state-level levies despite GST

• Excessive compliance paperwork

• Delayed approvals

• Collateral-heavy bank financing

• Labour-related overheads

• Local political interference

The association urged a shift towards enterprise-enabling governance, simplified compliance, and collateral-light financing for first-generation entrepreneurs.

High-Growth Sectors Identified

AIEA identified multiple sectors that will drive sustained demand for electronics:

• Electronic components manufacturing

• EMS

• Electric vehicles

• Renewable energy

• Telecom infrastructure

• Defence electronics

• Industrial automation & robotics

• Medical devices

Strengthening domestic component manufacturing will improve cost competitiveness across all these sectors simultaneously, the association noted.

AI: Opportunity, Not Threat

Contrary to fears, AIEA projected Artificial Intelligence as a hardware demand accelerator, not a job killer.

Future AI adoption will boost demand for:

• Smart sensors

• Edge-AI devices

• Automated testing systems

• Predictive maintenance tools

“AI should be viewed as a manufacturing opportunity, not a disruption. Embedded intelligence will drive hardware demand and strengthen domestic supply chains,” the note stated.

Budget Expectations

AIEA has called for:

• Dedicated incentives for component MSMEs

• Simplified compliance frameworks

• Collateral-free financing mechanisms

• Electronics-specific industrial clusters

• Labour cost rationalisation

The association believes these reforms can transform India into a globally competitive electronics manufacturing powerhouse.

Policy Engagement Gains Momentum

Confirming the outcome of the meeting, AIEA said Dr Shamika Ravi received the recommendations positively and assured that they would be actively considered during the Union Budget formulation process.

“This engagement reflects the government’s willingness to listen to industry at the grassroots level and shape policies that are execution-driven,” AIEA said.