Context: After achieving success in localising smartphone assembly for domestic use and limited exports, the government now aims to boost local value addition to deepen electronics manufacturing.
Relevance of the topic:
Prelims: India Semiconductor Mission; Electronics Components Manufacturing Scheme.
Mains: Need to boost local value addition in electronics manufacturing and government efforts in this direction.
State of Electronics Manufacturing in India
- India’s current domestic value addition in electronics manufacturing is estimated at 15-20% (China’s value addition is around 38%).
- India’s trade deficit with China reached an all-time high in 2024-25, nearing $100 billion. The majority of critical components such as chips, camera modules, PCBs, and passive components continue to be imported, primarily from China.
- India’s current electronics manufacturing value is $120 billion, and the government aims to scale this up to $500 billion in the coming years. India aims at building a domestic supply chain for core components like chips, camera modules, PCBs, and passive components.
Government Initiatives
To bridge this gap, the Government of India has launched several strategic subsidy schemes and policy interventions:
- India Semiconductor Mission (Rs 76,000 crore): Focused on fabrication and packaging of semiconductors, which are the heart of any electronic device.
- Electronics Components Manufacturing Scheme (~Rs 23,000 crore): Aimed at boosting local production of smaller yet critical components like resistors, capacitors, inductors, etc.
- PLI schemes for Smartphones and Laptops: Provide incentives to companies for manufacturing in India, based on incremental sales.
Electronics Components Manufacturing Scheme
- The government has launched a Rs 23000 crore incentive scheme aimed at boosting local manufacturing of essential electronics components.
- Earlier PLI schemes were successful in localising assembly, but core components continued to be imported, mostly from China.
- It aims to develop arobust component ecosystem by:
- attracting large investments (global/domestic) in the electronics component manufacturing ecosystem
- increasing Domestic Value Addition by developing capacity
- integrating Indian companies with Global Value Chains.
- The scheme targets manufacturing of a wide range of critical components, such as Display modules, Camera sub-assemblies, Printed Circuit Board Assemblies (PCBAs), Lithium battery enclosures, Passive components like resistors, capacitors, and ferrites.
- Implementation period: over six years.
- Expected outcomes:
- Create at least 91,600 direct jobs with subsidies linked to employment generation, encouraging companies to invest in human capital.
- Result in Rs 4.56 lakh crore worth of electronics production and move toward export-led growth.
- Likely to attract incremental investment of over Rs 59,000 crore, strengthening India’s industrial base.
Evaluation of PLI Schemes
- Launched in 2020, the PLI schemes aim to boost domestic manufacturing by offering financial incentives linked to incremental sales.
- It targeted 14 sectors, including smartphones, IT hardware, pharmaceuticals, automotive, etc.
- The smartphone PLI scheme has been one of the most successful with:
- Investment: Rs 10,905 crore
- Production output: Rs 7.15 lakh crore
- Exports: Rs 3.9 lakh crore
- Jobs created: ~ 1.4 lakh direct jobs
- As the PLI schemes approach sunset (1–3 years left), the government is reassessing their design and impact. So far, incentives are based only on incremental sales. Now, the government is considering broader metrics like
- Domestic value addition (i.e., how much of the product is made locally, rather than assembled from imported parts)
- Incremental exports and to promote India as a global manufacturing hub.