India has become a magnet for international smartphone manufacturers such as Apple and Samsung

Successful localization of smartphone assembly for domestic use and limited exports, the government has redirected its efforts towards enhancing local value addition within the sector.

The primary objective is to increase local value addition, decrease India's reliance on imports from countries such as China, and generate high-quality employment opportunities. Currently, domestic value addition is approximately 15-20%, with aspirations to double this figure in the coming years, while China's value addition in the sector stands at around 38%.Concerningly, India's trade deficit with China hit a record high in 2024-25, approaching $100 billion.

Electronics Sector Overview

The electronics sector includes the design, manufacturing, and marketing of electronic components and systems. It is one of the most traded and rapidly expanding industries worldwide, anticipated to significantly influence the global economy. Given its integration across all economic sectors, electronics holds both economic and strategic significance.

India’s Electronics Sector

Domestic Production: The production of electronics has surged from Rs. 1.90 lakh crore in FY 2014-15 to Rs. 9.52 lakh crore in FY 2023-24, reflecting a compound annual growth rate (CAGR) of over 17%.

Exports: The export of electronic goods has also risen from Rs. 0.38 lakh crore in FY 2014-15 to Rs. 2.41 lakh crore in FY 2023-24, with a CAGR exceeding 20%. India has emerged as the second-largest mobile phone manufacturer globally.The semiconductor ecosystem in India has gained substantial traction, with five major projects approved, amounting to a total investment of nearly Rs. 1.52 lakh crores.

Future Projections: It is anticipated that India's electronics production will reach USD 300 billion by 2026.

Challenges

Reliance on Imports: A significant dependence on imported components, particularly semiconductors, elevates costs and exposes the supply chain to vulnerabilities.

Infrastructure Deficiencies: Insufficient infrastructure for large-scale manufacturing and logistics undermines operational efficiency.

Shortage of Skilled Labor: There is a limited pool of skilled workers available for advanced manufacturing processes and research and development.

High Capital Requirements: Establishing world-class manufacturing facilities necessitates substantial investment, posing challenges for new entrants.

Technological Deficiencies: Certain segments of the electronic value chain lack access to advanced technology and innovation.

Competition from International Players: There is fierce competition from established global electronics manufacturers and nations with lower production costs.

Government Initiatives for the Electronics Sector in India:

Make in India: Initiated in 2014, this program aims to enhance India’s manufacturing sector and stimulate economic growth, transforming the country into a global center for design and manufacturing.

Phased Manufacturing Programme (PMP): Launched in 2017, this initiative seeks to encourage domestic value addition in mobile phones and their components, facilitating increased investment and the establishment of substantial manufacturing capacities in India.

Production Linked Incentive (PLI) Scheme: Introduced in 2020, this scheme is designed to enhance domestic manufacturing in mobile phones, electronic components, and semiconductor packaging, offering incentives ranging from 3% to 6% on incremental sales (compared to a base year) for qualifying companies, with a duration of five years.

Semicon India Program: Initiated in 2021 with a budget of ₹76,000 crore, this program is designed to enhance the domestic semiconductor sector through various incentives and strategic collaborations. During the Global Investors Summit 2025, it was revealed that India’s first homegrown semiconductor chip is expected to commence production by 2025.

Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): This initiative will offer a financial incentive of 25% on capital expenditures for a specified list of electronic products that are part of the downstream value chain.

Increased Budget: The allocation for electronics manufacturing has increased from ₹5,747 crore for 2024-25 to ₹8,885 crore for 2025-26, underscoring the government's dedication to fostering industrial growth.

Electronics Component Manufacturing Scheme: The Union Cabinet, led by the Prime Minister, has approved the Electronics Component Manufacturing Scheme with a budget of ₹22,919 crore, aimed at achieving self-reliance in the electronics supply chain. This scheme will have a duration of six years, including a one-year gestation period.

Expected Outcomes:

• Attract investments totaling ₹59,350 crore.
• Generate production worth ₹4,56,500 crore.
• Create 91,600 direct jobs along with numerous indirect employment opportunities.

Conclusion: India’s swift evolution into a global hub for electronics manufacturing reflects the effectiveness of the Make in India initiative. With a variety of programs designed to bolster manufacturing capabilities, the nation has significantly enhanced local production, exports, and investment. Targeting USD 300 billion in electronics production by 2026, India is establishing itself as a key player in the electronics and semiconductor sectors.