India's Emergence as a Global Electronics Manufacturing Hub
India, today, is a major player in the global electronics manufacturing industry. The country is rapidly becoming an electronics manufacturing hub, with the sector expected to rise to $ 300 billion by 2025-26. This growth can be attributed to the government's push to promote domestic electronics manufacturing, which has led to increased investment and the creation of new jobs.
The global electronics manufacturing services (EMS) market is projected to reach $ 1145 billion by 2026, registering a CAGR of 5.4% during the forecast period 2021-2026. From $ 9.8 billion in 2021, India’s domestic demand for consumer electronics is seeing significant growth and is expected to touch $ 21.18 billion by 2025. India is also home to the world's second-largest smartphone market, with over 1.3 billion mobile phone users in the country. This presents a huge opportunity for companies and investors looking to tap into the manufacturing of smartphones and other electronic devices.
One of the key initiatives driving India's push towards electronics manufacturing is the Production-Linked Incentive (PLI) scheme. The PLI scheme is aimed at promoting domestic manufacturing and export of electronic products, and offers companies incentives on incremental sales from products manufactured in India, over the base year. The country’s large-scale electronic manufacturing (LSEM) sector received the maximum allocation of INR 40,951 crore (approximately $5 billion) under this scheme. This has led to a surge in investments in the sector, with several global electronics companies, including Samsung and Apple, setting up manufacturing facilities in India. The global giant Apple became the first smartphone player in India to have exported $1 billion worth iPhones in a single month of December 2022.
The success of India's electronics manufacturing industry can be seen in the country's growing exports. Electronics is India's fastest-growing export sector, with smartphones being the top export item. In fact, India surpassed a remarkable $10 billion worth smartphone exports in FY 2022-2023. This is a testament to the country's ability to compete with other major electronics manufacturing hubs such as China and South Korea. 97% of the smartphones sold in the country are produced domestically, while exports have increased by over 139% over the last three years. The recent announcement for the setting up of the Electronics Manufacturing Cluster (EMC) at Dharwad, Karnataka worth INR 180 crore (approximately $21.98 million) is a step towards Atmanirbhar Bharat, and is expected to create over 18,000 jobs.
Key government initiatives aimed at boosting domestic production of electronics and IT hardware include the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), which offers financial incentives for the production of electronic components and semiconductors. The Modified Electronics Manufacturing Clusters (EMC 2.0) initiative seeks to establish world-class infrastructure for electronics manufacturing. The government has also liberalized foreign direct investment, allowing up to 100% FDI for electronics manufacturing.
Another important factor contributing to India's emergence as an electronics manufacturing hub is the country's highly skilled workforce. India is home to a large pool of technical and engineering talent, with many of the country's top universities offering courses in electronics and engineering. This has made India an attractive destination for multinational companies looking to set up research and development (R&D) centers and manufacturing plants in the country.
With the Indian government's unwavering support and key initiatives, the country has been successful in promoting domestic manufacturing and boosting exports. The Production-Linked Incentive (PLI) scheme, in particular, has been a game-changer for the electronics sector in India. With several global electronics giants investing heavily in the country, India is on its way to becoming a major electronics manufacturing hub.