Post GST reform boom: Ashwini Vaishnaw sees INR20 lakh crore more in electronics consumption - BusinessToday

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  Business and Finance on Sat, Oct 18th, 2025 by Business Today

Electronics Consumption Poised for Surge: Vaishnaw Links Growth to GST Reforms

India’s electronics consumption is on track to see a significant boost, potentially adding Rs 20 lakh crore over the next few years, according to Union Minister for Electronics and Information Technology Ashwini Vaishnaw. The projected surge is directly attributed to the Goods and Services Tax (GST) reforms implemented since 2017, which have leveled the playing field and fostered a more conducive environment for domestic manufacturing and consumption.

Vaishnaw’s statement, delivered at the 'Electronics Today' event in New Delhi, highlights a period of substantial growth within the Indian electronics sector. He emphasized that prior to GST implementation, the industry faced significant challenges due to cascading taxes and an uneven competitive landscape favoring imports. The reforms aimed to address these issues by unifying indirect tax rates across states, eliminating the ‘tax on tax’ phenomenon prevalent in the pre-GST era.

The initial GST rate for most electronics goods was 28%, but subsequent revisions have seen reductions for specific items like mobile phones and printed circuit boards (PCBs), further stimulating demand and encouraging local production. These adjustments were designed to align India's rates with global norms, making domestically manufactured products more competitive. The government’s focus has been on promoting “Make in India” initiatives within the electronics sector, aiming to reduce reliance on imports and create employment opportunities.

Vaishnaw pointed out that the GST reforms have not only benefited large manufacturers but also significantly impacted small and medium enterprises (SMEs) involved in component manufacturing and assembly. The simplification of tax procedures and the elimination of inter-state check posts have reduced logistical bottlenecks, lowering costs and improving efficiency for businesses across the value chain. This has fostered a more integrated ecosystem where SMEs can thrive alongside larger players.

The minister’s projection of Rs 20 lakh crore in additional electronics consumption is based on current growth trends and anticipated future investments. This figure encompasses a wide range of electronic products, including mobile phones, laptops, consumer appliances, industrial automation equipment, and components for the automotive sector. The government's Production Linked Incentive (PLI) schemes have also played a crucial role in attracting investment and boosting production across various electronics sub-sectors.

The PLI scheme, initially launched for sectors like mobile manufacturing and specified electronic components, offers financial incentives to companies based on their incremental sales of manufactured goods over a period of five years. This has spurred significant investments from both domestic and international players, leading to increased production capacity and job creation. The success of the initial PLI schemes prompted the government to expand it to other sectors like white goods (refrigerators, air conditioners, washing machines) and IT hardware.

According to a report by ICEA (India Cellular & Electronics Association), cited in various industry publications, India's electronics production has witnessed remarkable growth since GST implementation. The mobile phone manufacturing sector alone has seen an exponential increase in both volume and value, transforming India into a global hub for mobile device production. https://www.icea.in/ ICEA’s data consistently demonstrates the positive impact of government policies like GST and PLI on the industry's performance.

Vaishnaw also highlighted the growing demand for electronics in rural areas, driven by increased internet penetration and affordability of devices. Government initiatives aimed at digital literacy and providing access to affordable broadband connectivity are expected to further fuel this growth. The expansion of 5G services across the country is anticipated to create new opportunities for innovation and consumption within the electronics sector.

The minister’s optimism reflects a broader trend of economic recovery and increased consumer spending in India. While global headwinds and supply chain disruptions continue to pose challenges, the GST reforms and supportive government policies have laid a strong foundation for sustained growth in the Indian electronics industry. The projected Rs 20 lakh crore boost represents not just an increase in consumption but also signifies the potential for significant job creation, technological advancement, and enhanced economic competitiveness on a global scale.

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