India is swiftly transforming into a global powerhouse in electronics manufacturing, with a sharp rise in local value addition from 30% a few years ago to approximately 70% in FY25. According to a report by Axis Capital, this trend is expected to continue, reaching 90% by FY27, placing India among the most self-reliant electronics producers in the world. This leap is being fuelled by a combination of proactive government policies, rising domestic capabilities, and a robust talent pool.

A Decade of Transformation

Over the past decade, India's mobile phone exports have skyrocketed by 77 times, signalling a dramatic shift in its global trade balance. Simultaneously, the country has significantly reduced its reliance on imported fully built air conditioners (CBUs). From 35% in FY19, these imports have dropped to a mere 5% by FY25, showcasing the success of import substitution strategies. This change is largely attributed to localised production of critical components such as compressors, copper tubes, and aluminium coils.

In FY24 alone, India imported around 8.5 million Room Air Conditioner (RAC) compressors, but the trend is set to reverse. Industry stakeholders predict that India will locally manufacture all RAC compressors within the next 2-3 years, indicating a steep rise in indigenous capabilities and infrastructure development.

Surge in PCBA Demand

Another sector witnessing strong growth is Printed Circuit Board Assembly (PCBA). Demand is climbing across both business-to-business and consumer sectors, spurred by higher import duties and a push for domestic manufacturing. Notably, the import of mobile PCBAs worth Rs. 30,000 crore (US$ 3.48 billion) in FY18 has now declined to nearly zero by FY24.

This transition highlights the success of policies like the Phased Manufacturing Program (PMP) and rising domestic production capabilities. PCBA units are being integrated into broader local supply chains, further increasing value addition percentages and strengthening India’s position in the global supply chain.

Driving Forces Behind the Growth

The impressive growth in India's electronics manufacturing sector has been underpinned by multiple flagship initiatives:

• Production Linked Incentive (PLI) scheme: Designed to boost domestic manufacturing and attract global investment, the PLI scheme offers financial incentives tied to output and efficiency metrics.

• Phased Manufacturing Program (PMP): This initiative encourages gradual import substitution by promoting the local production of components and sub-assemblies.

• SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors): Focused on strengthening component-level infrastructure and technologies, this scheme helps companies scale up manufacturing in critical segments.

Additionally, the reduction in corporate tax to 15% for new manufacturing units has made India an extremely attractive destination for global players looking to diversify their manufacturing bases.

India: A Global Electronics Powerhouse

Thanks to these robust developments, India has become the second-largest mobile phone producer globally. More notably, 99% of all mobile phones sold in India are now manufactured locally. This reflects not just assembly, but deep manufacturing capability, where everything from PCBs to casings and even chipsets is being increasingly sourced or produced within the country.

This level of localization and vertical integration is a major step toward self-reliance and positions India as a serious contender in the global electronics supply chain.

Future Outlook

Looking ahead, the sector is poised for even more aggressive growth. The government's target of achieving 90% value addition by FY27 appears realistic given the current trajectory. Major investments are being made in:

• Chip fabrication plants (fabs), with several proposals under evaluation.

• Component parks and electronics manufacturing clusters.

• R&D centers focused on innovation in semiconductors, displays, and IoT solutions.

These efforts are expected to reduce the import of high-end components, deepen the value chain, and enhance technological independence.

Conclusion

India’s electronics manufacturing revolution is a textbook example of how strategic policy interventions, when combined with entrepreneurial momentum and global demand, can re-shape an industry. From being an import-dependent country to a major exporter and manufacturer, India’s transformation has been both swift and comprehensive.

With value addition expected to hit 90% by FY27, India is not just assembling electronics — it is building them, piece by piece, from the ground up. As the country continues to rise as a global manufacturing hub, its impact on the global electronics supply chain will be profound and lasting.

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