Reference:

• India’s electronics sector is estimated to reach a production of ₹11.3 lakh crore in 2024-25, which is approximately six times higher than the production of ₹1.9 lakh crore in 2014-15.

Overview of Growth: Changes in Data:

In 2014-15, India was a major importer of electronics products, where production met only 26% of total demand. However, due to policy reforms and investments, the sector has developed rapidly. By 2024-25, production has recorded a 17.4% Compound Annual Growth Rate (CAGR).

Contribution of Mobile Phone Segment:

• This has been the main engine of the sector’s growth. From ₹0.18 lakh crore in 2014-15, it increased to ₹5.45 lakh crore in 2024-25, i.e., 28 times growth. India is now the second largest mobile phone manufacturing country in the world, producing 330 million units annually. Exports increased 127 times to ₹2 lakh crore.

Export Destinations:

• USA, UAE, Netherlands, UK, and Italy are the top markets. Apple’s contribution is 43% of exports.

Employment Generation:

• The sector has generated 2.5 million direct jobs, with the mobile segment contributing 1.7 million.

This growth strengthens India’s participation in the Global Value Chain (GVC), where the country is moving beyond assembly towards component manufacturing.

Key Factors for Growth:

• Several structural and policy factors have driven this decade-long surge, working at both domestic and global levels:

Government Policies and Incentives:

• Production-Linked Incentive (PLI) Scheme: Started in 2020, attracted ₹1.97 lakh crore investment. Provides 4-6% incentives in 14 sectors including mobile, IT hardware, and semiconductors. Budget 2025-26 allocated ₹9,000 crore for PLI.
• SPECS Scheme: 25% incentive on capital expenditure for electronic component production. Received 249 proposals worth ₹1.15 lakh crore.
• EMC 2.0: Electronics Manufacturing Clusters established in Noida, Hyderabad, Bengaluru, ensuring logistics and raw material availability.
• Semiconductor Mission: Three plants worth ₹1.25 lakh crore approved in 2024, including Tata and others’ contribution. Generates 15,710 jobs.

Domestic Demand and Consumer Behavior:

• Population of 1.44 billion with 900 million internet users; smartphone penetration increased 4% YoY (15.1 million units shipped in 2024).
• 5G rollout, IoT devices, and EV market: electronic content in EVs expected to rise from 20% to 40-50%. Consumer spending and urbanization have boosted demand.

Foreign Investment and Global Shift:

• FDI of $4 billion from FY20-21; 70% from PLI beneficiaries. Giants like Apple, Samsung, Foxconn increasing production in India.
• Supply chain diversification from China: US tariffs (10% on China) benefit India. India is now the top smartphone exporter to the USA.

Technology and Skill Development:

• Digital India and Skill India: Training for 30 million people.
• 2024 focus on design and PCB assembly, improving margins.

These factors collectively make the sector globally competitive, with India now holding 5% of global production.

Challenges: Roadblocks Ahead:

Despite growth, the sector faces important challenges that could hinder global ambitions:

• Import dependency: 70% of components like PCB, sensors, and displays imported (mainly from China). Localisation needed to meet $240 billion component demand by 2030.
• Skilled workforce shortage: To achieve 12 million jobs target, 50% workforce requires reskilling. Shortage of 200,000 experts in AI, ML, and Data Science.
• Infrastructure and logistics: Limited power, transport, and EMC capacity. Scale of small manufacturers limited (only 1% FDI).
• Competition and cost: Competing with China and Vietnam; high component costs and trade barriers. Lack of focus on sustainability (e.g., EV batteries).
• Regulations and awareness: Ease of Doing Business improved (rank 142 → 63, 2014-22), but 30% investors unaware of new schemes.

Organizations like CII recommend a 30% CAGR in component production to overcome these challenges.

Future Prospects: $500 Billion Target by 2030:

• Government aims to establish a $500 billion ecosystem by 2030-31, with production of $300 billion and exports of $210 billion, achievable with 22% annual growth.
• Opportunities: Growth in EV, 5G, IoT, and smart devices. Semiconductor investment of $1.52 lakh crore to generate 142,000 jobs. PLI 2.0 to produce ₹3.5 lakh crore in IT hardware.
• Strategy: Component localisation, skill development (increase ITI enrollment), innovation through Global Capacity Centers (GCCs). Budget 2025-26 allocated ₹7,000 crore for semiconductors.
• Impact: 7.5% GDP contribution; 5.5–6 million additional jobs. India can become the global “Electronics Factory”.