India’s Electronics System Design and Manufacturing (ESDM) sector is experiencing an unprecedented transformation, driven by the ambitious Make in India initiative. This policy push, coupled with strategic investments and growing global interest, has positioned India as a key player in electronics manufacturing and semiconductor innovation. The rise of India in the ESDM landscape is not just a reflection of favorable policies but also of a fundamental shift in global supply chains, which are now seeking alternatives to traditional manufacturing hubs like China.
But what’s really fueling this momentum? How sustainable is this growth? What challenges still stand in the way of India’s journey to becoming a global electronics hub? And most importantly, how can India strengthen its position in the global ESDM ecosystem? Let’s get deeper into the fascinating evolution of India’s ESDM sector, exploring its milestones, policies, challenges, and the road ahead.
The Make in India ImpactÂ
The Make in India initiative has been a catalyst for growth in India’s electronics industry, paving the way for increased domestic manufacturing, reduced dependence on imports, and strengthened supply chains. Over the years, India has emerged as a strong competitor in mobile phone production, semiconductor design, automotive electronics, and consumer electronics. Government support, along with initiatives like Atmanirbhar Bharat, has reinforced the push for self-reliance in electronics manufacturing.
“The Make in India initiative has been nothing short of a game-changer for India’s electronics industry,” says Pooja Jamwal, Head of Strategy and Corporate Development at Cyient DLM. “It has fueled the growth of domestic manufacturing, leading to a significant reduction in the trade deficit in critical sectors like mobile phones, consumer electronics, and automotive components. The momentum we are witnessing today is the result of consistent policy backing and industry collaboration.”
Key Milestones and Market Growth Â
India’s electronics market was valued at USD 400 billion in 2023, with mobile phones alone contributing 43% and automotive electronics 8% to this growing sector. The demand for electronic products continues to surge, driven by an expanding middle class, increasing digital adoption, and rapid urbanization. Notably, the sector has achieved a compound annual growth rate (CAGR) of 16.5% since 2015, outpacing the global average of 5.3%. This growth trajectory suggests India’s electronics market could cross USD 500 billion by 2027.
The Production-Linked Incentive (PLI) scheme has attracted global giants like Apple, Samsung, and Foxconn, boosting both local production and exports. This scheme has played a crucial role in making India a preferred destination for global electronics manufacturers looking to diversify their supply chains. As of 2024, PLI beneficiaries have invested over USD 2.5 billion in new manufacturing facilities, creating more than 200,000 direct jobs. The ripple effect of these investments has generated an additional 600,000 indirect employment opportunities across the value chain.
Between 2000 and 2024, the sector received USD 4.83 billion in Foreign Direct Investment (FDI), reflecting strong global confidence in India’s electronics ecosystem. The steady influx of investments has enabled infrastructure development, skills enhancement, and technology transfer. What’s particularly noteworthy is that 65% of these investments came in just the last five years (2019-2024), indicating accelerating interest from global players. Major investments include Foxconn’s USD 1.5 billion expansion in Tamil Nadu and Samsung’s USD 700 million display manufacturing unit in Uttar Pradesh.
India’s mobile phone exports surpassed USD 10 billion in 2023, reflecting its growing prominence in global supply chains. The government’s focus on making India a global mobile phone manufacturing hub is now paying dividends, with brands like Xiaomi, Oppo, and Vivo setting up large-scale production units. From virtually zero exports in 2014, India has become the second-largest mobile phone manufacturer globally, accounting for 11% of global production. The export basket has also diversified from basic feature phones to premium smartphones, with Apple exporting iPhones worth USD 5 billion from India in 2023 alone.
The country has over 250 semiconductor design companies, strengthening its position in chip design and innovation. India’s engineers and R&D facilities have been integral to global semiconductor development, making it a hotbed for talent in this domain. Bengaluru alone hosts more than 100 chip design firms, contributing to 20% of global VLSI design workforce. Companies like Qualcomm, Intel, and AMD have their largest R&D centers outside their home countries in India, working on cutting-edge technologies like 5G modems and AI processors.
“India’s progress is remarkable, but sustaining this growth will require continued innovation and strategic execution,” says Subburathinam P, Chief Operating Officer, TeamLease. “It’s not just about assembling components anymore—it’s about building an end-to-end electronics ecosystem that is resilient, scalable, and future-ready. A robust semiconductor supply chain, along with a focus on R&D and innovation, will be crucial.”
Policies Powering the Boom: What’s Fueling the Growth? Â
A thriving ecosystem requires strong policies and incentives to flourish. India has introduced a series of targeted initiatives aimed at attracting investment and fostering innovation. Here’s a closer look at some of the most impactful ones:
Production-Linked Incentive (PLI) Scheme Â
The PLI scheme has been crucial in making India globally competitive by incentivizing manufacturers to scale domestic production. It offers financial support to manufacturers who achieve predefined production targets, ensuring that companies not only establish facilities in India but also ramp up production over time. The scheme covers 14 sectors including electronics, with an outlay of USD 10 billion over five years. For large-scale electronics manufacturing, the incentives range from 4% to 6% of incremental sales, creating a compelling business case for manufacturers.
“This initiative has made India more competitive in the global market by offering financial incentives to manufacturers who scale up local production,” explains Jamwal. “By focusing on mobile devices, semiconductors, and electronic components, PLI has played a pivotal role in transforming India into a manufacturing powerhouse.”
The results speak for themselves – PLI beneficiaries in electronics manufacturing have reported a 45% increase in production value year-on-year, with exports growing by 60% since the scheme’s implementation. The success has prompted the government to consider expanding the scheme to cover more components and sub-assemblies, potentially adding another USD 3 billion in incentives.
Scheme for Promotion of Electronic Components and Semiconductors (SPECS)Â Â
“While PLI incentivizes output, SPECS supports the development of India’s component ecosystem,” says Sri Lakshmi, Head of Semiconductor BU at MosChip Technologies. “This scheme provides financial incentives for manufacturers of critical electronic components, including PCBs, semiconductor fabs, and display fabs. The long-term vision is to reduce import dependency and build a strong indigenous supply chain.”
SPECS offers 25% capital subsidy for electronics manufacturing clusters and has already attracted USD 1.2 billion in investments for local component manufacturing. The scheme has been particularly successful in promoting PCB manufacturing, with domestic production increasing by 40% since 2021. However, experts suggest the scheme needs to be enhanced to cover more advanced components like multi-layer PCBs and semiconductor substrates to truly reduce import dependence.
EMC 2.0 (Electronics Manufacturing Clusters)Â Â
“Having a strong infrastructure backbone is key to growth,” notes Subburathinam. “EMC 2.0 is fostering high-tech manufacturing hubs, helping industries co-locate, share resources, and enhance economies of scale.”
“With well-planned manufacturing clusters, we are not just assembling products but also developing an ecosystem that supports innovation and indigenous production,” he adds. These clusters aim to create self-sufficient electronics manufacturing zones with ready access to power, logistics, skilled labor, and raw materials. The government has approved 19 such clusters across 11 states, with 5 already operational in Andhra Pradesh, Tamil Nadu, and Uttar Pradesh. These clusters have reduced logistics costs for manufacturers by 15-20% and improved supply chain reliability.
Design-Linked Incentive (DLI) Scheme Â
To boost India’s semiconductor ecosystem, the DLI scheme encourages indigenous chip design and development. This policy aims to strengthen India’s capability in electronic product design, a critical component in reducing import dependence and fostering innovation. The scheme provides up to 50% reimbursement of design expenses and has already supported 25 domestic startups working on chips for IoT, automotive, and 5G applications. Notably, five of these startups have taped out their first chips, marking a significant milestone in India’s semiconductor journey.
What’s Holding India Back? Â
Despite its rapid growth, India’s ESDM sector faces significant hurdles that need to be addressed to sustain long-term success.
Dependence on Imports Â
“Despite growth in local manufacturing, we still rely heavily on imported components like PCBs and semiconductors, which limits our ability to become truly self-reliant,” explains Jamwal. This dependency is a major concern, especially in light of global supply chain disruptions. Currently, India imports nearly 80% of its electronic components, including:
– Printed Circuit Boards (PCBs): 65% imported, mainly from China
– Semiconductors: 90% imported
– Display panels: 95% imported
The government is addressing this through the Component Manufacturing Scheme, which offers additional incentives for local component production. However, building a complete ecosystem will take 5-7 years of sustained effort.
Infrastructure & Logistics Bottlenecks Â
According to Subburathinam, logistics is a major bottleneck: “Though India has improved port connectivity and supply chains, the cost and time to transport critical components are still higher compared to China and Vietnam. This adds to manufacturing costs and reduces competitiveness.”
Key challenges include:
– Average port turnaround time: 2.5 days (vs 1 day in China)
– Logistics costs: 14% of GDP (vs 8% in China)
– Power reliability: Frequent fluctuations affecting precision manufacturing
The PM Gati Shakti initiative is addressing these issues by developing dedicated industrial corridors with seamless multimodal connectivity. Six new electronics manufacturing clusters are being developed with integrated road, rail and port links.
Shortage of Skilled Labor Â
The semiconductor industry demands highly specialized talent. “We need more investment in training programs and industry-academia collaboration to create a globally competitive workforce,” notes Sri Lakshmi. Without a steady talent pipeline, India’s ambitions in high-tech manufacturing may face obstacles.
Current gaps:
– Annual semiconductor graduates: 5,000 (Need: 15,000 by 2025)
– VLSI design engineers: 20,000 (Need: 50,000 by 2026)
Initiatives like the Semiconductor Talent Development Program (STDP) aim to train 10,000 engineers annually through industry-academia partnerships. Companies like Intel and AMD have launched dedicated training centers in Bengaluru and Hyderabad.
Competitive Cost Pressures Â
“Countries like Vietnam, Taiwan, and China offer lower production costs, making it tough for India to compete,” admits Jamwal. “To stay ahead, we must focus on cost-effective production and simplified regulatory frameworks.”
Comparative manufacturing costs:
| Country | Labor Cost | Power Cost | Logistics Cost |
| China | $6.5/hr | $0.08/kWh | 8% of GDP |
| Vietnam | $3.2/hr | $0.07/kWh | 10% of GDP |
| India | $4.1/hr | $0.10/kWh | 14% of GDP |
India is addressing this through:
– Industrial power tariff subsidies (20% reduction for electronics manufacturers)
– Production efficiency programs with Japanese and Korean experts
– Single-window clearances to reduce compliance costs
Limited R&D Investments Â
While India is emerging as a manufacturing hub, R&D investment remains a challenge. Encouraging private-sector involvement in R&D and fostering public-private partnerships can drive technological advancements in the ESDM sector.
Current R&D landscape:
– Private sector R&D spend: 0.3% of electronics revenue (vs 1.2% in South Korea)
– Government R&D allocation: $1.2 billion (needs to triple by 2030)
The new Electronics Innovation Fund with $500 million corpus aims to boost indigenous R&D, particularly in areas like:
– Advanced packaging technologies
– MEMS sensors
– Power electronics for EVs
Semiconductor Revolution Â
India is making strategic investments in semiconductors to reduce import dependence and establish a robust domestic supply chain.
“India has a strong presence in chip design, with major companies like Qualcomm, Intel, and AMD operating R&D centers here,” says Jamwal. However, full-fledged semiconductor fabrication is still a work in progress.
Current Semiconductor Projects Â
1. Micron’s ATMP Facility
– Investment: $2.7 billion
– Location: Gujarat
– Capacity: 1 million units/day by 2025
2. Tata-PSMC Foundry
– Technology: 28nm-65nm nodes
– Investment: $11 billion
– Production Start: 2026
3. ISRO’s Space-Grade Chips
– Radiation-hardened chips for satellites
– Collaboration with IIT Bombay
Design Ecosystem Growth Â
– 5 Indian startups taped out chips in 2023
– DLI Scheme supporting 25 design companies
– RISC-V adoption growing for IoT devices
A Vision for India’s ESDM Future Â
India’s ESDM sector is rapidly evolving, fueled by Industry 4.0, IoT, and AI-driven electronics. With continued policy support, strategic investments, and a focus on innovation, India’s ESDM sector is well-positioned for exponential growth.
Key Growth Areas Â
1. Industrial Electronics
– Factory automation systems
– Robotics controllers
2. Automotive Electronics
– EV powertrains
– ADAS systems
3. Medical Electronics
– Portable diagnostic devices
– Wearable health monitors
Strategic Recommendations Â
1. Component Manufacturing Push
– Focus on displays, PCBs, and sensors
– Create component SEZs with tax benefits
2. Workforce Development
– Expand ITI courses in SMT assembly
– Industry-certified training programs
3. R&D Infrastructure
– National Advanced Packaging Facility
– Shared fab access for startups
“India’s ESDM transformation is entering its most exciting phase,” concludes Sri Lakshmi. “From importing mobile phones to designing chips for global markets, we’re witnessing a true industrial revolution. The next five years will determine whether India becomes just another manufacturing destination or the innovation hub for next-gen electronics.”
With $50 billion in projected investments by 2030 and 5 million new jobs expected, the sector’s potential is enormous. However, success will require coordinated efforts across government, industry and academia to build a truly self-reliant electronics ecosystem.
