Which Indian manufacturing sectors are actually becoming self-reliant?

India is moving beyond assembly in several industries, yet gaps in critical components and upstream manufacturing continue to limit domestic value addition

From smartphones and solar modules to electric vehicles and telecom equipment, India is making more of the products it once imported. Yet a product being assembled in India does not necessarily mean its value chain is local. What matters more is how much of the components, materials and technology that go into it are also made domestically.

 

That distinction is becoming central to India's manufacturing push. A recent NITI Aayog report, prepared with Crisil, argues that the country's ambition must move beyond expanding production toward deeper value addition, stronger domestic capabilities, and greater participation across global value chains.

 

Across automobiles, smartphones, EVs, solar and telecom, the picture is therefore mixed. Some sectors have developed deep supplier ecosystems, while others have become good at making the final product but still depend heavily on imported inputs.

 

Automobiles have the deepest established ecosystem

India's automobile industry has one of the country's most developed manufacturing networks, with a large base of component makers supplying domestic and global vehicle manufacturers.

 

The NITI Aayog-Crisil report points to localisation efforts, close Original Equipment Manufacturer (OEM) collaboration and joint ventures with global component companies as factors that have helped Indian auto-component manufacturers become increasingly integrated into global supply chains. Auto-component exports also reached about $7.5 billion in FY2025, with Indian suppliers serving markets across Europe, North America and Asia.

 

With this supplier base already in place, the next challenge is to extend localisation into more advanced automotive technologies. The government's PLI-Auto scheme requires eligible advanced automotive technology products to achieve at least 50 per cent domestic value addition, while encouraging investment across the automotive value chain. The scheme had attracted ₹44,326 crore of investment and generated 67,820 jobs by March 2026.

 

This gives the automobile sector an advantage over industries that are still trying to build their domestic supplier networks from the ground up. 

Smartphones surge, components lag

Smartphones are perhaps India's clearest recent manufacturing success story. Government data shows that 99.2 per cent of mobile phones used in India are now made domestically, while India has become the world's second-largest mobile phone manufacturer by volume and a net exporter of mobile phones. Smartphones also became India's top individual export commodity in FY2025-26.

 

However, the massive production does not equal total self-reliance. Most of this activity involves assembling imported components rather than making them locally. An external evaluation of the mobile manufacturing PLI scheme found that domestic value addition stood at just 23 per cent in FY2023-24, meaning over three-quarters of a phone’s value still comes from foreign parts.

 

To bridge this gap, the government is shifting its focus from simple assembly to building essential sub-parts domestically. Through initiatives like the Electronics Component Manufacturing Scheme, India is encouraging local production of vital inputs, such as circuit boards, camera modules, and display components.

Solar capacity grows, but localisation lags

India's solar manufacturing capacity has expanded dramatically. Solar module manufacturing capacity rose from just 2.3 GW in 2014 to about 172 GW by March 2026, while domestic solar installations have also surged.

 

Yet the deeper value chain remains heavily dependent on imports. The NITI Aayog-Crisil report estimates import dependence at about 100 per cent for polysilicon, more than 90 per cent for wafers, more than 60 per cent for solar cells and more than 40 per cent for modules.

 

The government is now pushing upstream production, including a proposed pathway under the Approved List of Models and Manufacturers framework for domestic ingot and wafer manufacturing from June 2028.

EVs grow, batteries lag

Electric vehicles are also moving towards greater localisation, although their biggest vulnerability lies beneath the vehicle itself.

 

EV sales rose around 25 per cent year-on-year in FY2026 to 2.45 million units, according to data from the Federation of Automobile Dealers Associations (Fada). However, the sector remains dependent on imported lithium-ion batteries and critical minerals, which leaves the supply chain exposed to disruptions and changes in global trade policy.

 

Government policy is aimed at closing this gap. The ₹18,100-crore PLI scheme for Advanced Chemistry Cells aims to establish 50 GWh of domestic battery manufacturing capacity. By May 2026, 40 GWh had been awarded to four beneficiaries, while one 1.4 GWh plant had been established.

Telecom scales, but imports persist

Telecom equipment highlights the gap between manufacturing and genuine localisation most sharply.

 

The NITI Aayog-Crisil report says Indian companies have expanded production of products such as optical fibre cables, routers, switches and customer-premises equipment. However, domestic value addition remains limited because manufacturers still rely heavily on imported semiconductors, RF modules, integrated circuits and processors. Localisation for several telecom products remains below 15 per cent.

 

The gap is even wider for specific telecom products. Domestic localisation is just 4 per cent for 4G/LTE base stations and 5 per cent for 5G base stations. It is even lower for switches, at 3 per cent, while GPON optical network terminals have 12 per cent localisation.

 

India's telecom equipment exports remain modest at $0.6-$1 billion annually, compared with imports of about $4-$5 billion, further showing how much room remains to build a deeper domestic component ecosystem.

 

India's manufacturing push is now moving beyond scale to greater domestic value addition. The government's latest initiatives are increasingly focused on building the components, sub-assemblies and critical technologies that sit deeper in supply chains.