This article originally appeared in the March/April issue of Procurement Pro.
By Harry Fowle, Associate Editor
India, home to the world’s largest population, is a sleeping giant when it comes to its position on the world stage. Housing the recipe for success, it only needs time to cook up its power in many ways, whether that be its emerging space sector or expanding industrial and manufacturing sectors.
In the past decade, India has positioned itself as a major player in global electronics procurement, driven by government initiatives, foreign investments, and a growing domestic market. Once heavily reliant on imports, it is now emerging as a manufacturing hub, attracting multinational corporations and fostering homegrown companies.
Policies like the Production-Linked Incentive (PLI) scheme and import duty exemptions on key components have strengthened India’s appeal. It is already the world’s second largest mobile phone manufacturer, with Apple and Samsung leading production. Domestic firms like Tata Electronics and Dixon Technologies are expanding in semiconductor assembly, consumer electronics, and telecommunications.
However, India faces challenges before it can compete with the sector’s biggest players. Despite reducing import dependence, it still competes with established manufacturing centres like China and Vietnam. Strategic investments, R&D incentives, and a focus on self-reliance will be key to India’s rise as a global leader in electronics procurement and manufacturing.
Government initiatives and policies
A major driver of India’s electronics industry growth has been a significant transformation, largely driven by proactive government policies aimed at strengthening domestic manufacturing and reducing reliance on imports. In recent years, the Indian government has implemented a range of initiatives to attract investments, promote self-reliance, and enhance the nation’s position as a global electronics hub.
Import duty exemptions to boost local manufacturing
Outlined in its February 2025 budget, India has removed import duties on critical components used in mobile phone production, including PCBs, camera module parts, and USB cables. This policy move is designed to lower production costs for manufacturers such as Apple, Samsung, and Xiaomi, further consolidating India’s status as a key smartphone manufacturing destination. The exemptions align with the government’s broader objective of making India a competitive alternative to China and Vietnam in electronics production.
Critical minerals policy for sustainable supply chains
India has been quick to recognise the vital role of securing essential raw materials, scrapping customs duties on waste and scrap of critical minerals, including cobalt, tungsten, lithium-ion battery components, and antimony. This measure ensures that India has a steady supply of key resources required for semiconductor production, electric vehicles, and consumer electronics, reducing dependency on foreign sources and strengthening its long-term manufacturing resilience.
The Production-Linked Incentive (PLI) scheme for electronics
One of India’s flagship policies that has massively supported its electronics industry is the PLI scheme, which has been extended to various sectors, including semiconductors, telecoms, and large-scale electronics manufacturing. Approved by the government in 2021, the scheme provides financial incentives to manufacturers based on incremental production, encouraging brand and domestic firms to expand operations in India. Companies such as Dixon Technologies, and Tata Electronics have benefited significantly, with substantial investments in new manufacturing facilities.
Boosting the chip industry
In an effort to build a robust semiconductor ecosystem, the Indian government launched a dedicated incentive programme in 2021 called ‘Semiconductor Mission’ to attract investments in chip design, fabrication, and assembly.
Tata Electronics’ upcoming semiconductor packaging facility in Assam, expected to be operational in 2025, is one of the first beneficiaries of this initiative. The government is also actively collaborating with international semiconductor firms to establish fabrication plants within the country. The goal is to roll out the first ‘Made in India’ chip by mid-2025.
Building a domestic industry
Homegrown, reshoring, selfreliance – these are the buzzwords of today in the procurement world and India is well aware. To achieve this, India, in early 2025, finalised a $3 billion incentive package focused on R&D in the electronics sector with the aim to encourage innovation and development of homegrown technologies. The hope here is that this initiative’s aims will position Indian companies as global leaders in emerging technologies such as artificial intelligence, quantum computing, and advanced chip design, reducing reliance on foreign intellectual property and boosting indigenous manufacturing capabilities.
Doubling down on electronics and industrial hubs
The Indian government is actively developing new electronics manufacturing clusters across states such as Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra. These clusters provide infrastructure, tax incentives, and logistical support to companies setting up production units, ensuring seamless integration into global supply chains. Additionally, India’s industrial corridors are being expanded to facilitate faster transportation of goods, reducing costs and improving efficiency for electronics manufacturers.
Investment and development
India’s push to become a global electronics manufacturing powerhouse has been reinforced by substantial investments from both domestic and international companies. With favourable government policies, proved infrastructure, and a skilled workforce, the country has attracted major players in semiconductor manufacturing, consumer electronics, and telecommunications.
These investments are not only strengthening India’s supply chain capabilities but also positioning it as a competitive alternative to traditional electronics hubs like China and Vietnam.
Here are some of the key investments that are happening in India:
- Tata Electronics’ Semiconductor Facility – India’s first indigenous semiconductor assembly and test facility is being set up in Jagiroad, Assam, with an investment of ₹27,000 crore (~$3 million), expected to be operational in 2025
- Apple and Samsung expanding production – Apple and Samsung continue to ramp up smartphone manufacturing in India
- Dixon Technologies’ Growth in EMS – Dixon Technologies, a leading Indian electronics manufacturing services (EMS) provider, is expanding its operations to supply key components for global brands such as Panasonic, Philips, and Xiaomi
- Nokia’s Multi-Billion Dollar Contract – Nokia secured a major deal with Bharti Airtel in 2024 to supply 4G and 5G network equipment, strengthening India’s telecom infrastructure
- Foxconn’s Increased Investments – Foxconn, a key Apple supplier, is investing further in Indian manufacturing, particularly in Karnataka and Tamil Nadu, to expand its supply chain capabilities
These investments are a clear indicator of India’s growing desire and prominence in the global electronics industry, with a strong focus on self reliance, supply chain diversification, and cutting-edge technology development.
Challenges to overcome
India’s electronics manufacturing sector is growing rapidly but faces several challenges in competing with established global hubs. Overcoming these hurdles is key to its ambitions of becoming a major electronics procurement and manufacturing destination.
Despite government policies promoting local production, India remains dependent on imports for key components like semiconductors, display panels, and advanced battery materials. While investments in semiconductor assembly and testing are increasing, India lacks a full-fledged fabrication plant. Competing with Taiwan and South Korea’s decades of expertise will require significant technological and financial backing.
Infrastructure constraints such as high logistics costs, power supply issues, and port congestion hinder production and exports. Although industrial corridors and manufacturing clusters are under development, their full impact will take time. Additionally, a shortage of skilled engineers and technicians, especially in semiconductor design and high-precision manufacturing, remains a concern despite ongoing training efforts.
China and Vietnam benefit from integrated supply chains, lower production costs, and economies of scale. While companies are diversifying away from China, India must streamline regulations and improve efficiency to remain competitive. Frequent policy changes in taxation, tariffs, and industrial regulations create uncertainty, deterring long-term investment.
India is expanding its manufacturing base, but local R&D capabilities lag behind global leaders. Without greater investment, moving from assembly to innovation-driven manufacturing will be difficult. Supply chain gaps in component availability, testing, and packaging further increase costs and lead times.
India has made significant progress, but sustained policy reforms, infrastructure investment, talent development, and supply chain localisation will be crucial in establishing it as a global electronics manufacturing leader.
