PLI and improving demand to favour electronics MSMEs: SME Tracker

PLI-led manufacturing push and improving domestic demand are expected to drive double-digit growth for electronics MSMEs, with margins seeing modest expansion

Consumption of electronics in India is expected to increase 11-13 per cent year-on-year (Y-o-Y) to ₹17-18 trillion this financial, riding on government initiatives to boost demand and broader policy moves such as rationalisation of goods and services tax rates and revision of income tax slabs. Mobile phones, consumer electronics and industrial electronics together account for 55-60 per cent of total electronic sales in India. 

Next financial, consumption growth is projected to improve to 12-14 per cent Y-o-Y, supported by benign inflation, affordable financing options, rising consumer aspirations and increasing industrial demand for electronic components. 

Electronics production is expected to increase 10-20 per cent Y-o-Y next financial, led by the Production Linked Incentive (PLI) scheme. 

Policy measures such as higher domestic content requirement, mandatory Bureau of Indian Standards certification for resale of imported electronic products and supportive taxation policies will aid domestic manufacturing of electronics. 

The recently approved Electronics Component Manufacturing Scheme, which seeks to attract investments from global and domestic players is another positive. In fact, the government has received investment proposals worth ₹1.15 trillion as of December 2025, significantly higher than the initially envisaged ₹59,350 crore. 

Moreover, 10 semiconductor plants have been approved under the Semicon India Programme, launched in 2022, with cumulative investments of ₹1.6 trillion. 

All these developments bode well for micro, small and medium enterprises (MSMEs) engaged in electronic component manufacturing and assembly of consumer and industrial electronic products. 

These MSMEs, which account for 25-35 per cent of the electronics industry, are expected to log 13- 15 per cent revenue growth this financial, led by strong demand across mobile phones, consumer and industrial electronics, computer hardware and strategic electronics. 

However, after remaining range-bound last financial, Ebitda margins of MSMEs are likely to expand 10-20 basis points to 7-8 per cent, supported by higher volumes, though partly offset by rupee depreciation and increasing import costs.