Why in News?

Global smartphone giants like Apple and Samsung have set up production bases in India due to a large talent pool, government subsidies, and the need to diversify from China.

While India has successfully localized smartphone assembly, the government is now focusing on increasing domestic value addition. To achieve this, it has launched targeted subsidy schemes, including the ₹76,000 crore India Semiconductor Mission and a ₹23,000 crore scheme for passive electronic components, alongside existing PLI schemes.

The goal is to reduce import dependence—especially on China—boost local manufacturing across all layers of electronics, and create high-quality jobs.

Currently, India’s local value addition is 15–20%, with plans to double it in the coming years (China stands at 38%). However, India's trade deficit with China hit a record $100 billion in 2024–25, highlighting the urgency of these efforts.

What’s in Today’s Article?

• India’s Progress in Electronics Manufacturing Value Addition
• Electronics Components Manufacturing Scheme
• Performance and Future of PLI Schemes

India’s Progress in Electronics Manufacturing Value Addition

• Goal to Increase Domestic Value Addition
  • The government’s new components policy aims to raise local value addition in electronics from 15-16% to 40-50%, further boosting the sector's growth and reducing import dependence.
• Mobile Phone Exports Growth
  • Mobile phone exports from India have surged 77 times over the past decade, showcasing the country's increasing role in global electronics manufacturing.
• Growth in Electronics Exports
  • India’s electronics exports have been growing at a robust CAGR of 26% from FY16 to FY25, signaling a growing presence in the global market.
• Domestic Production of Key Components
  • India has reduced its reliance on mobile PCBAs, with imports dropping from Rs 300 billion in FY18 to near zero by FY24.
• India’s Position in Mobile Phone Manufacturing
  • India is now the world’s second-largest mobile phone producer, with nearly 99% of the phones sold domestically being manufactured locally.

Electronics Components Manufacturing Scheme

• Recently, the IT Ministry has launched a ₹22,919 crore incentive scheme for electronics components aimed at deepening India’s electronics manufacturing capabilities.
• This builds on the earlier PLI schemes which primarily targeted smartphone and computer assembly.
• Focus on Component-Level Manufacturing
  • The six-year scheme targets the domestic production of key components such as display modules, camera sub-assemblies, PCBs, lithium cell enclosures, resistors, capacitors, and ferrites.
  • These are essential for smartphones, laptops, and household appliances.
• Reducing Dependence on China
  • As local assembly of devices has grown, India’s reliance on China for internal components has increased.
  • The new scheme aims to reduce this dependence by fostering domestic component manufacturing.
• Job Creation and Investment Goals
  • The scheme is expected to:
    • Create at least 91,600 direct jobs
    • Generate ₹4.56 lakh crore worth of production
    • Attract ₹59,350 crore in incremental investment
  • Annual subsidies will be linked to the number of jobs created by participating companies.

Performance and Future of PLI Schemes

• Success of the Smartphone PLI Scheme
  • The smartphone PLI scheme has been highly successful among the 14 programs launched in 2020.
  • Key achievements as of February 2025 include:
    • Cumulative investment: ₹10,905 crore
    • Cumulative production: ₹7,15,823 crore
    • Cumulative exports: ₹3,90,387 crore
    • Direct jobs created: 1,39,670
• Performance of the IT Hardware PLI Scheme
  • The IT hardware PLI scheme, initially slow, gained momentum in 2023 with an increased allocation of ₹17,000 crore.
  • Key figures for laptops and computers under the scheme:
    • Cumulative production: ₹10,365 crore
    • Cumulative investment: ₹522 crore
    • Direct jobs created: 5,132
• Government Support and Distribution of Funds
• The government has disbursed nearly $1 billion (₹8,700 crore) between 2022-2025 under the smartphone PLI scheme, with major contract manufacturers like Foxconn, Tata Electronics, and Pegatron receiving over 75% of the funds.
• Future Directions for PLI Schemes
  • With the current schemes nearing their sunset in 1-3 years, the government is considering extending incentives to include metrics beyond incremental sales, such as domestic value addition and incremental exports, to further strengthen the sector.