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

 

The answer goes beyond the factory floor.

 

While India now assembles millions of smartphones, laptops and other electronic devices every year, many of the highest-value components, including semiconductors, display panels, camera modules, memory chips and specialised manufacturing equipment, are still imported.

 

The country has built considerable strength in final assembly, but much of the value embedded in these products continues to originate overseas.

   

This distinction has become increasingly important as countries compete to build capabilities across the electronics value chain. Manufacturing components, developing intellectual property (IP), designing chips and investing in research and development (R&D) generate far greater economic value than assembling finished products alone.

 

Alongside production-linked incentive (PLI) schemes that attracted global manufacturers, New Delhi has announced the ₹62,500-crore Mobile Phone Manufacturing Scheme (MPMS) to encourage domestic component manufacturing, design capabilities and Indian brands. It has also floated the final 10 gigawatt-hour (GWh) tender under the ₹18,100-crore Advanced Chemistry Cell (ACC) PLI scheme with revised eligibility norms and greater emphasis on battery efficiency.

 

The objective is clear: deepen India's manufacturing ecosystem rather than remain an assembly hub.

What does 'Made in India' really mean?

A smartphone assembled in India is not necessarily made entirely with Indian components.

 

Modern electronics are produced through global value chains, with different components manufactured in different countries before final assembly. A single smartphone may contain chips fabricated in Taiwan or South Korea, display panels from China, memory from global suppliers and camera modules manufactured elsewhere before being assembled in India.

 

That is why economists focus on domestic value addition - the share of a product's value created within the country through manufacturing, engineering, design and associated services.

 

India has made progress, but a sizeable gap remains.

 

According to Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), domestic value addition in India's mobile phone manufacturing currently stands at 18-20 per cent, compared with 38-40 per cent in the world's largest mobile phone manufacturing country, even though it continues to import several high-value inputs.

 

Mohindroo said India's mobile phone production has grown nine-fold over the past decade at a compound annual growth rate (CAGR) of 24 per cent, making it the world's second-largest mobile phone manufacturer. He attributed this growth to India's participation in global value chains, where different countries specialise in producing specific sub-assemblies and components.

 

The implication is that India's manufacturing success is genuine, but the next phase of growth depends less on producing more phones and more on manufacturing a larger share of the components that go into them.

What is already being made in India?

India's electronics ecosystem has expanded well beyond basic assembly.

 

Domestic manufacturers now produce finished smartphones while increasingly manufacturing printed circuit board (PCB) assemblies, chargers, batteries, mechanical housings, cables and packaging within the country. As global manufacturers expanded operations in India, suppliers followed, leading to greater localisation of several sub-assemblies.

 

The government now wants to deepen this ecosystem further.

 

According to ICEA, the Electronics Components Manufacturing Scheme (ECMS) and the newly announced MPMS are designed to encourage domestic production of display modules, camera modules, printed circuit boards and lithium-ion cells. Industry expects these investments to increase domestic value addition over the coming years as more suppliers establish manufacturing facilities in India.

Why India still imports?

Despite this progress, some of the most valuable parts of an electronic device continue to be sourced from overseas.

Semiconductors remain India's biggest import dependency. Advanced display panels, memory chips, image sensors, specialised electronic components and much of the equipment required to manufacture them are also imported.

 

One area where India is trying to build capabilities faster is semiconductor assembly, testing and packaging, commonly known as OSAT (Outsourced Semiconductor Assembly and Test).

 

According to Ashok Mehta, chairman of Suchi Semicon, OSAT represents a meaningful and growing share of semiconductor value while requiring significantly lower investment and shorter timelines than semiconductor fabrication.

 

"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," he said.

 

Mehta added that domestic OSAT facilities would not only reduce dependence on imported semiconductor devices but also help develop the skilled workforce, quality systems and supplier ecosystem needed for future semiconductor manufacturing in India.

What India is trying to build

India's localisation strategy now extends well beyond assembly.

 

The ECMS and the ₹62,500-crore MPMS aim to expand domestic production of components and sub-assemblies while encouraging investment in design, R&D and Indian electronics brands.

 

A similar strategy is being pursued in the battery sector through the ₹18,100-crore PLI scheme for Advanced Chemistry Cells (ACC), which targets 50 GWh of domestic battery manufacturing capacity. The latest 10 GWh tender under the scheme introduces easier eligibility norms, shifts the focus from energy density to battery efficiency and lowers subsidies per kilowatt-hour, signalling a move towards commercially competitive manufacturing.

 

The broader policy push also includes the National Critical Mineral Mission, which seeks to secure supplies of lithium, cobalt, nickel and graphite, alongside Battery Waste Management Rules aimed at recovering these materials through recycling.

 

Together, these initiatives are intended to reduce India's dependence on imported components while building a more integrated electronics manufacturing ecosystem.

Why assembly alone is not enough

For India, the next phase of electronics manufacturing is not simply about producing more devices. It is about creating greater value through semiconductor design, intellectual property (IP) and higher-value components.

 

India has long been a global hub for semiconductor design services, with engineers developing chips for multinational companies. However, relatively few Indian firms have designed and commercialised their own semiconductor products.

 

According to Shashwath TR, co-founder and chief executive officer of Mindgrove Technologies, building product companies requires a fundamentally 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, adding that patient capital, early investment in testing infrastructure and founders willing to commercialise products are essential.

 

Shashwath believes chip design should remain India's priority over the next five to ten years because it has lower barriers to entry than semiconductor fabrication while generating substantial economic value.

 

"Design has the lowest barriers to entry in terms of time and capital, and the highest impact in terms of both value and problem solving. It plays to our software and engineering strength and builds the intellectual property base that manufacturing will eventually need," he said.

 

He added that ownership of IP remains central to long-term competitiveness.

 

"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 as he stressed that manufacturing capabilities must continue to expand alongside design.

Lessons from Asia's manufacturing hubs

Countries that dominate electronics manufacturing today built their ecosystems over decades rather than years.

 

China gradually expanded from large-scale assembly into components, semiconductor packaging and, eventually, chip fabrication. Malaysia followed a different path, becoming a leading semiconductor packaging hub long before it developed higher-end manufacturing capabilities.

 

Mehta said Malaysia's experience shows that countries can become important players in the semiconductor industry 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.

 

He added that India's success will depend on sustained execution rather than short-term policy support.

 

"These ecosystems took fifteen to twenty years of compounding capability. India has the demand, the talent and now the policy support through the India Semiconductor Mission. What we need is sustained execution and discipline," he said.

 

The experience of these countries underlines that manufacturing ecosystems evolve in stages. Assembly creates scale, but long-term competitiveness depends on developing suppliers, technology, skilled talent and domestic intellectual property.

Can India move beyond assembly?

Industry leaders argue that India has already built a strong foundation.

 

According to ICEA, the country's success in mobile phone manufacturing has created the scale needed to expand into information technology hardware, consumer electronics, wearables and hearables.

 

Mohindroo said the next phase of growth should focus on three priorities: strengthening domestic capabilities in design, research and intellectual property to create Indian brands; maintaining a stable and globally competitive policy environment that encourages long-term investments; and attracting global value chains to manufacture not only finished products but also sub-assemblies and components in India.

 

If these objectives are achieved, he said, India can emerge as a global hub for electronics manufacturing, innovation and technology.

The road ahead

India's electronics manufacturing story has entered a new phase.

 

The first chapter focused on attracting global manufacturers and demonstrating that the country could assemble electronics at scale. That objective has largely been achieved, with mobile phone production increasing sharply over the past decade.

 

The next challenge is more complex.

 

Increasing domestic value addition will require India to manufacture more high-value components, strengthen semiconductor packaging and testing, expand chip design capabilities, develop intellectual property and build deeper supplier networks.

 

India no longer needs to prove that it can manufacture electronics. The bigger challenge is capturing a larger share of the value created by those products.

 

Until that happens, many devices labelled 'Made in India' will continue to depend on global supply chains for some of their most valuable components.