India's Electronics Moment: From Assembly Hub to Value-Chain Powerhouse
Updated: Sep 22
India's electronics story has changed dramatically in little more than a decade.
Electronics production increased from ₹1.9 lakh crore in 2014–15 to ₹11.3 lakh crore in 2024–25, according to the Government of India. Electronics exports rose from ₹38,000 crore to ₹3.27 lakh crore over the same period, while electronics became India's third-largest export category in 2024–25, up from seventh place in 2021–22.
That is not a marginal improvement. It is an industrial transformation.
But it also creates a new strategic question.
India has demonstrated that it can manufacture and assemble electronics at scale. Can it now capture more of the value created around those products? That is a considerably harder challenge.
Assembly Was the Beginning—Not the Destination
Manufacturing scale matters.
Large-scale assembly creates jobs, develops supplier relationships, builds quality systems and connects domestic manufacturers to global customers. It also creates an industrial base from which more sophisticated capabilities can emerge.
But assembly is only one layer of an electronics value chain. Behind a smartphone, server, automobile electronic system, or industrial device sit:
Semiconductors
Displays
Camera modules
Printed circuit boards
Passive components
Connectors
Batteries
Sensors
Optical components
Specialised materials
Manufacturing equipment
Software and firmware
Chip design
Intellectual property
The economic question is therefore not simply how many finished products leave Indian factories. It is: how much of the value chain behind those products is also being created in India?
That is the next frontier.
The Policy Is Changing Because the Challenge Is Changing
India's policy architecture increasingly recognises this distinction.
The Electronics Component Manufacturing Scheme (ECMS) explicitly aims to develop a robust component ecosystem and integrate India's electronics industry more deeply with global value chains. Its target segments include display and camera-module sub-assemblies, multi-layer PCBs, passive components, electro-mechanical components, Li-ion cells, enclosures, flexible PCBs, optical transceivers and the supply chain and capital equipment supporting these activities.
The response is significant in scale. The first three tranches of ECMS approvals covered 46 projects, representing approximately ₹54,567 crore of investment and projected production of roughly ₹3.60 lakh crore, according to government data.
These numbers are projections rather than realised outcomes—an important distinction. But they indicate that the investment pipeline is moving decisively beyond final assembly into the components layer.
The Semiconductor Ambition Is Broader Still
India's semiconductor strategy has also evolved considerably. The initial objective was to establish domestic manufacturing and packaging capability. The next stage is broader.
In July 2026, the Government approved Semicon India 2.0 with a total outlay of ₹1,27,500 crore. The programme is intended to extend India's capabilities into semiconductor manufacturing equipment and materials, full-stack design, Indian IP and stronger supply chains.
A semiconductor ecosystem is not simply a collection of fabs. It includes design, IP, materials, equipment, fabrication, packaging, testing, electronics manufacturing and end markets. The deeper the ecosystem, the more opportunities Indian companies have to capture value.
As of July 2026, twelve semiconductor manufacturing projects had been approved with investments exceeding ₹1.64 lakh crore. Three companies—Micron, Kaynes and CG Semi—had already started commercial production. That suggests the conversation has moved beyond policy aspiration toward physical execution. But execution is where the harder work begins.
The Real Strategic Challenge: Ecosystem Depth
A country does not become a major electronics power simply by attracting a few large plants. The ecosystem around those plants matters enormously.
Consider a semiconductor facility. Its competitiveness depends on much more than the fab itself. It requires:
Specialised equipment
Chemicals and materials
Ultrapure water and reliable power
Precision engineering and clean-room capability
Logistics and maintenance
Testing and packaging
Skilled technicians and semiconductor designers
Software and research institutions
Customers willing to integrate locally produced components
This creates an important strategic principle: the value of an anchor investment is determined partly by what develops around it. An isolated plant can be an industrial asset.
An ecosystem can become an industrial capability.
The Opportunity for Indian Companies Is Larger Than Semiconductors
It is tempting to interpret this transformation as a semiconductor story. It is broader. India's next electronics opportunity extends across the layers surrounding semiconductors and finished products.
Components
PCBs, connectors, passive components, camera modules, enclosures and optical components can become significant domestic industries in their own right.
Capital Equipment
As production scales, the machinery and specialised equipment required to manufacture electronics become increasingly strategic assets.
Engineering Services
Manufacturers require design, testing, automation, process engineering, quality engineering and maintenance capabilities—all of which create high-value service opportunities.
Logistics
Higher-value electronics require more sophisticated logistics, inventory management and supply-chain visibility than commodity assembly.
Industrial Software
As factories become more automated, manufacturing execution, quality systems and digital supply-chain capabilities become increasingly important competitive differentiators.
R&D and Design
The greatest long-term value may ultimately accrue to companies that control intellectual property rather than simply production capacity.
This creates a much larger opportunity than electronics manufacturing alone. It creates an electronics industrial ecosystem.
The Value-Capture Question
There is an important strategic distinction between production and value capture.
A company can generate significant electronics revenue without retaining a proportionate share of the economic value created. Value may flow outward through imported components, foreign-owned IP, imported equipment, overseas design, licensing fees or external technology platforms.
That does not make local manufacturing unimportant. It simply means that the next stage of industrial development should focus increasingly on the capabilities that sit upstream and around manufacturing.
This is why component manufacturing, semiconductor design and intellectual property matter. The objective is not merely to make more in India. It is to create more of the value in India.
The Organisational Challenge May Be Underestimated
Moving up the value chain requires a different organisational capability from assembly at scale.
A company producing a mature product at high volume needs excellence in quality, throughput, procurement, cost management, inventory, delivery and process control.
A company developing components or semiconductor technologies must add:
R&D and engineering
IP management
Advanced talent acquisition and retention
Customer co-development
Technology partnerships
Longer investment horizons
Sophisticated programme management
These are different organisational muscles. A company cannot simply add an R&D department to an assembly business and assume it has become an innovation-led manufacturer.
The operating model must evolve. The talent model must evolve. The leadership model must evolve. The investment horizon must evolve. This is where industrial strategy becomes organisational strategy.
What Should Indian Companies Do Now?
The policy environment creates opportunity. But policy support alone does not create durable competitive advantage. Companies should consider five strategic moves.
1. Identify Where Value Is Actually Being Captured
Map the full value chain rather than looking only at the manufacturing plant. Where does margin sit? Where does intellectual property sit? Where are the critical dependencies? Where could localisation create competitive advantage?
2. Choose a Position Rather Than Chasing the Entire Ecosystem
Not every company should attempt to become a semiconductor manufacturer. There are opportunities in components, equipment, testing, design, engineering, software, logistics and specialised materials. The strategic question is: where can we build a defensible capability that becomes more valuable as the ecosystem expands?
3. Build Capability Before Capacity
Capacity can be purchased. Capability has to be built. Companies entering higher-value electronics need to invest simultaneously in engineering talent, process excellence, quality systems, R&D, intellectual property, customer relationships and leadership. Otherwise, capital intensity may increase faster than competitive advantage.
4. Think Ecosystem, Not Factory
An electronics business should map its dependencies across suppliers, customers, universities, technology partners, logistics providers and government programmes. The strongest companies may be those that orchestrate these relationships rather than attempting to own every capability themselves.
5. Measure Value Addition, Not Just Output
Traditional manufacturing metrics focus on units produced, revenue, yield, cost and exports. The next generation of industrial metrics should increasingly include domestic value addition, proprietary IP, R&D intensity, engineering depth, supplier capability, export complexity, customer diversification and technology ownership.
What gets measured eventually gets managed.
The Strategic Opportunity for SMEs
Large anchor companies will attract much of the attention. But the deeper economic impact may come from the supplier ecosystem that develops around them.
A component manufacturer does not need to become a global electronics giant to create strategic value. It may become:
The preferred supplier for one global OEM
A specialist manufacturer of a critical component
A high-precision tooling provider
A semiconductor equipment supplier
A design house
A testing specialist
A logistics and supply-chain technology provider
This is where India's large SME base becomes important. The opportunity is to move from vendor to strategic supplier to capability partner to global specialist. That progression can create much more durable competitive advantage than competing purely on cost.
From ‘Make in India’ to ‘Own More of the Value’
India's first electronics transformation was about scale. The next one needs to be about depth.
The country has already demonstrated that it can attract large manufacturing investments and integrate itself into global production networks. The next challenge is to build the capabilities around those investments so that more value remains within the domestic ecosystem.
That means components, equipment, semiconductor manufacturing, design, IP, specialised engineering and capable suppliers. And it means organisations able to operate at increasingly sophisticated levels.
The strategic opportunity is therefore much larger than electronics manufacturing itself. It is about building an industrial ecosystem capable of learning, innovating and moving continuously upward in the value chain.
The PEC Perspective
At PositivEnergy Consulting, we believe competitive advantage is created when strategy, capability and execution reinforce one another.
India's electronics transformation illustrates that principle particularly well. The first phase proved that India can manufacture at scale. The next phase will test whether India can build and retain deeper capabilities around that scale.
For Indian companies, the opportunity is not simply to participate in the electronics boom. It is to identify where the next layer of value will accumulate—and build a defensible position there.
For global companies, the opportunity is to look at India not simply as an assembly destination, but as an increasingly sophisticated ecosystem of manufacturing, engineering, design and technology capability.
And for policymakers, the challenge is to ensure that incentives translate into enduring industrial capabilities rather than temporary capacity.
The question is no longer whether India can make electronics.
The strategic question is how much of the electronics value chain India can learn to own.
That may determine whether the current electronics boom becomes a manufacturing success—or the foundation of a new industrial capability.
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