The Indian tech industry is witnessing developments similar to those observed in countries like the U.S., Taiwan, and others during the early stages of their tech evolution, as per a report by Nomura.
According to the report, key success factors in the evolution of tech industries globally include government support, access to relatively cheap labour, and the presence of innovative and determined players. The report noted that these conditions are now emerging in India as well.
Tech evolution supported by various factors
"The evolution of the tech industry in countries such as the US, Japan, Korea, China, and Taiwan indicates a few common success factors, including government support, relatively cheap labour; and innovative and determined players. We note that similar conditions are developing in India," the report stated.
It further emphasised that the Indian government is providing robust support for the localisation of manufacturing and exports through various attractive schemes, such as the Production Linked Incentive (PLI) scheme and import restrictions. These initiatives are playing a crucial role in fuelling the growth of the tech industry in India, paralleling the environment seen in the early stages of tech development in other countries.
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Strong government support
"In our view, this is the right approach by the Indian government, and all successful countries have given strong government support to the tech industry for many years in their early stages," the report added.
On the subject of global competitiveness, the report pointed out that India benefits from cost-competitive labour, with labour costs being 20–50 per cent cheaper than in Vietnam and Thailand. This factor enhanced India's attractiveness as a destination for tech investment.
Additionally, the report highlighted that India's neutral stance in the ongoing U.S.-China tech rivalry has also made it an appealing partner for both Western and Asian tech leaders.
India's neutral stance
"India's neutral stance on the US-China tech rivalry makes it an attractive partner for both Western and Asian tech partners, in our view. We believe favourable conditions are also supporting capital flow into the sector," the report noted.
Tech sector growth projections
The report forecasts that these enabling factors will lead to significant growth in India's electronics production, projecting an increase from USD 115 billion in FY24 to USD 450 billion by FY30, representing a compound annual growth rate (CAGR) of around 25 per cent.
This growth will be driven by the PLI schemes (around USD 20 billion), reduced reliance on Chinese imports, and increasing domestic consumption.
