India's electronics boom: How much is really being made at home?

India's electronics boom is undeniable. The bigger question is whether it's building a deep manufacturing ecosystem, or simply assembling products designed and supplied elsewhere

India has become the world's second-largest mobile phone manufacturer by volume. Electronics exports have risen sharply, smartphones assembled in India are being shipped across the world, and global companies have expanded their manufacturing footprint in the country. Through Semicon 2.0, the government is now trying to move the industry beyond large-scale assembly by supporting component manufacturing, product design and research.

 

Yet, beneath these milestones lies a crucial question: how much of India's electronics production is actually created within the country?

How much semiconductor value does India currently add?

There are two ways to measure India’s progress, and they produce different answers. The first is the gross value of components manufactured domestically. The second is domestic value addition, which measures the share of a finished product’s value generated within India rather than through imported inputs.

 

Electronic components accounted for only 9 per cent of India’s electronics production in 2023-24. With total electronics output of ₹9.52 trillion that year, the value of components produced domestically works out to about ₹85,700 crore. Globally, components accounted for around 42 per cent of electronics production in 2022.

 

On the other hand, domestic value addition in India’s mobile phone industry stands at 18–20 per cent, according to Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA). This compares with 38–40 per cent in the world’s largest mobile phone manufacturing country, despite its continued dependence on some imported inputs.

 

India’s mobile phone production has grown ninefold over the past decade, recording a compound annual growth rate (CAGR) of 24 per cent, Mohindroo said.

 

Much of this growth has come from India’s participation in global value chains, under which different countries specialise in particular components and stages of production.

 

India now manufactures finished smartphones as well as printed circuit board assemblies, chargers, batteries, mechanical housings, cables and packaging. The arrival of global manufacturers has also encouraged some suppliers to establish operations in the country.

 

However, advanced display panels, memory chips, image sensors, specialised electronic components and much of the equipment used to manufacture them are still sourced from overseas. Semiconductors remain the largest import dependency.

 

In 2024, India recorded a net trade deficit of $23.5 billion in chips. Its corresponding deficits were $4.3 billion for display panels and $2.7 billion for batteries, according to trade data compiled by NITI Aayog. These numbers show that India’s domestic component production remains far below the requirements of its expanding device-assembly industry.

What is the government doing to deepen manufacturing?

Production-linked incentive (PLI) schemes helped India attract manufacturers and expand electronics assembly. The focus is now shifting towards components, research and development (R&D), and domestically owned brands.

 

The Electronics Components Manufacturing Scheme (ECMS) and the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) seek to encourage the production of display and camera modules, printed circuit boards, lithium-ion cells and other components.

 

The government is pursuing a similar strategy in the battery industry. Its ₹18,100 crore Advanced Chemistry Cell (ACC) PLI scheme targets 50 gigawatt-hours (GWh) of domestic battery manufacturing capacity.

 

The latest tender for the remaining 10 GWh has eased eligibility conditions, shifted the focus from energy density to battery efficiency and reduced subsidies per kilowatt-hour. The changes are intended to promote commercially competitive manufacturing rather than capacity creation alone.

Where can India build greater value?

Semiconductor assembly, testing and packaging could offer India a relatively quick route into higher-value manufacturing.

 

These operations, commonly known as outsourced semiconductor assembly and test (OSAT), require less capital and take less time to establish than semiconductor fabrication plants.

 

The Cabinet-approved Semicon 2.0 programme, with an outlay of ₹1.27 trillion, identifies semiconductor packaging and testing as one of six pillars of India's localisation strategy. Under the first phase of the semiconductor programme, 12 manufacturing units involving cumulative investment of more than ₹1.64 lakh crore have been approved. These include one silicon fab, one silicon-carbide fab and nine packaging units.

 

Micron, Kaynes and CG Semi have begun commercial production, while India's first semiconductor fab is scheduled to be commissioned in 2028.

 

“Fabs take several years and tens of billions of dollars; a world-class OSAT facility can be qualified and shipping in two to three years at a fraction of that investment,” said Ashok Mehta, chairman of Suchi Semicon.

 

Domestic OSAT facilities could reduce reliance on imported semiconductor devices while helping India develop the workforce, quality systems and supplier networks needed for more advanced manufacturing, he added.

 

Chip design and intellectual property (IP) present another opportunity. India is already a major centre for semiconductor design services, with engineers developing chips for multinational companies. However, relatively few Indian companies design and commercialise their own semiconductor products.

 

Shashwath T R, co-founder and chief executive officer of Mindgrove Technologies, said building product companies required a different approach from providing design services.

 

“Design services offer a steady, well-defined path. Building your own product means owning and learning from every failure along the way,” he said.

 

Such companies require patient capital, testing infrastructure and founders willing to undertake lengthy product-development and commercialisation cycles.

 

Shashwath said chip design should remain a priority for India over the next five to 10 years because it requires less time and capital than semiconductor fabrication while generating substantial economic value.

 

“Design and IP are where most of a chip’s value sits, regardless of where it is fabricated. When Indian companies own the architecture, the software stack and the intellectual property, that value stays here,” he said.

What can India learn from other Asian manufacturing hubs?

The countries that dominate electronics manufacturing built their capabilities in stages over several decades.

 

China began with large-scale assembly before expanding into components, semiconductor packaging and chip fabrication. Malaysia developed into a major semiconductor packaging centre before moving towards more advanced manufacturing.

 

Mehta said Malaysia demonstrated how a country could become an important semiconductor player without immediately investing in fabrication plants.

 

“Penang became a global packaging hub through consistent policy, skilled talent and deep partnerships with international device makers, decades before anyone discussed fabrication there,” he said.

 

India similarly needs sustained investment in skills, suppliers, infrastructure and technology. Policy incentives may attract factories, but developing a competitive manufacturing ecosystem will take longer.

What will determine India’s next phase?

India’s mobile phone industry has created the scale needed to expand into information technology hardware, consumer electronics, wearables and hearables, according to ICEA.

 

Mohindroo said the next phase should focus on strengthening design, research and IP capabilities; maintaining a stable and competitive policy environment; and attracting global suppliers to manufacture components and sub-assemblies in India.

 

The country has established itself as a major electronics assembly centre. Capturing more value will now depend on whether it can build the components, technology, brands and intellectual property that go into the finished products.