India Core Electronics Manufacturing Growth

India's Electronics Evolution: From Assembly Hub to Core Manufacturing Powerhouse

December 21, 2025 – India’s electronics sector is undergoing a fundamental transformation. Having established itself as a global assembly hub, the nation is now strategically advancing into high-value core manufacturing, design, and component engineering. This shift is critical for capturing greater value, building supply chain resilience, and achieving long-term technological sovereignty.

Export Momentum Signals Structural Shift

Electronics have surged to become India's third-largest and fastest-growing export category. In the first half of FY26, electronics exports reached approximately USD 22.2 billion, marking a 42% year-on-year increase. This growth trajectory, up from seventh place just a few years ago, underscores a sector moving beyond simple assembly. Production value has grown nearly six-fold in the past decade, supported by targeted Production Linked Incentive (PLI) schemes that are now deliberately fostering a complete domestic ecosystem.

Strategic Policy Focus: Building the Ecosystem

Government policy is evolving to target the foundation of electronics manufacturing. A recent ₹2.29 lakh crore program aims to boost domestic production of critical components across telecom, automotive, and industrial sectors. The goal is to raise local value addition significantly above the earlier 15–20% levels associated with assembly-led models. Incentives are now tied not just to output, but to production value, employment, and the development of a supplier network encompassing fabricators, PCB makers, and material science firms.

The Semiconductor Pivot: From Vision to Reality

The heart of this transition lies in semiconductors. Through the India Semiconductor Mission, the country has approved ten projects—including a proposed 28nm fab, advanced packaging units, and facilities for display and power devices—with commitments around ₹1.6 lakh crore. While initial projects won't achieve self-sufficiency, they are designed to seed a domestic ecosystem. Success hinges on executing these complex projects on schedule, achieving global-standard yields, and catalyzing a dense local supplier base rather than creating isolated facilities.

Author's Insight: The semiconductor push represents a high-stakes compression of the learning curve. Unlike East Asian leaders who developed depth over decades, India is leveraging subsidies and global partnerships to accelerate capability building. The real test will be in creating a sustainable innovation pipeline that extends beyond fabrication into design, equipment, and materials.

Industry 4.0 & 5.0: The Knowledge-Driven Factory Floor

The competitive landscape is being redefined by smart manufacturing. Indian electronics manufacturing services (EMS) and original design manufacturers (ODM) are increasingly adopting predictive maintenance, digital twins, and real-time analytics. This shift from labor arbitrage to knowledge-driven operations is evident in the smartphone sector, where India has become the world’s second-largest manufacturer. The role has evolved from basic assembly to encompass board-level design, firmware development, and creating region-specific variants for global brands.

Conquering the PCB Bottleneck

A key indicator of manufacturing depth is control over printed circuit boards (PCBs). Long-term dependence on imported bare boards and laminates has capped local value addition. New policy initiatives are directly addressing this by incentivizing domestic production of high-density interconnect PCBs, multilayer boards, copper-clad laminates, and camera modules. Building capacity in these technically complex, margin-rich sub-assemblies is essential for moving overall local value addition toward 40-50% in key product segments.

Talent Development for a High-Tech Future

The sector's future depends on a specialized workforce. While electronics manufacturing has created an estimated 25 lakh jobs in the past decade, the next wave—in fabs, advanced packaging, and PCB fabrication—demands new skills: clean-room operations, process engineering, RF/power electronics, and embedded software. India's demographic advantage, with a large population under 35, provides the raw potential. Converting this into an industry-ready talent pool requires deep industry-academia partnerships, curriculum modernization, and structured upskilling pathways to meet the global semiconductor industry's projected need for over one million new skilled workers by 2030.

Sustainability as a Competitive Imperative

Global supply chains now mandate strong environmental, social, and governance (ESG) credentials. Indian manufacturers are responding with green energy adoption, energy-efficient machinery, and responsible sourcing. The next frontier is circularity—designing for longevity and building robust e-waste recycling to recover critical materials. Establishing credible green manufacturing processes is no longer optional; it is an entry ticket to partnerships with leading global brands and access to green finance.

The Defining Challenge: Value Capture and Co-Creation

The true measure of India's electronics leap will not be a production value target, but its ability to capture greater intellectual and economic value within the country. This requires excelling in core manufacturing execution, fostering innovation in component design, and nurturing a workforce adept at the intersection of advanced automation, sustainability, and complex global value chains. The journey is shifting from participating in global assembly lines to co-creating the technologies that define the future.

Frequently Asked Questions (FAQ)

Q1: What is the difference between electronics assembly and core manufacturing?
A1: Assembly involves putting together imported components into a final product. Core manufacturing encompasses the design and production of those high-value components themselves—like semiconductors, advanced PCBs, and displays—which capture a much larger share of the product's total value.

Q2: Why are semiconductors so critical to India's electronics strategy?
A2: Semiconductors are the "brains" of all modern electronics. Manufacturing them domestically reduces strategic dependency, improves supply chain security, and anchors a high-tech ecosystem of design, materials, and equipment companies, creating high-value jobs and innovation.

Q3: How is Industry 5.0 relevant to Indian manufacturing?
A3: Industry 5.0 emphasizes collaboration between humans and advanced technologies like AI and cobots. For India, it represents a path to move beyond cost-based competition by leveraging human ingenuity alongside automation for more flexible, efficient, and innovative production, particularly in complex assembly and customization.

Q4: What role does sustainability play in electronics manufacturing competitiveness?
A4: Sustainability is now a key procurement criterion for global brands. Manufacturers with strong ESG practices—using renewable energy, managing e-waste, and ensuring ethical sourcing—gain preferential access to supply chains, attract green investment, and future-proof their operations against tightening environmental regulations.

Q5: Can India realistically compete with established semiconductor hubs like Taiwan?
A5: India is not aiming to immediately displace established leaders. The initial strategy is to build a foundational, commercially viable ecosystem in specific niches (like legacy nodes and packaging) to meet growing domestic demand and participate in the global supply chain, while gradually climbing the value ladder over the long term.

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