India’s electronics push needs deeper manufacturing

The global electronics industry is undergoing rapid transformation, driven by technological advances and rising consumer demand. Key trends include the rapid adoption of Internet of Things (IoT) technologies, increasing demand for energy-efficient devices, and the expansion of smart homes and automotive electronics.

At the same time, the industry faces challenges such as supply chain disruptions, fluctuating raw material prices, and geopolitical tensions. Despite these pressures, the sector continues to innovate, with a growing emphasis on sustainability and environmentally responsible manufacturing.

The global consumer electronics market is projected to reach a valuation of USD 1,446 billion by 2036, up from USD 738 billion in 2026, reflecting a compound annual growth rate of around 7 per cent, according to Future Market Insights.

Growth is being structurally driven by the integration of on-device artificial intelligence across smartphones, wearables and home entertainment systems, along with the increasing adoption of satellite connectivity in flagship devices.

The International Data Corporation reported in early 2026 that global smartphone shipments grew 6.4 per cent in 2025, signalling a recovery in device replacement cycles. This trend is compelling manufacturers to invest in scalable production and distribution infrastructure to meet rising demand.

In India, the electronics industry is rapidly transitioning from simple assembly operations to deeper component manufacturing.

The shift is supported by the government’s Rs 40,000-crore Electronics Components Manufacturing Scheme (ECMS) aimed at strengthening the domestic supply chain for printed circuit boards, camera modules and display panels.

The Union Budget 2026–27 increased the outlay for the ECMS to Rs 40,000 crore from Rs 22,805 crore, reflecting the government’s focus on reducing dependence on imports and building a robust domestic electronics ecosystem.

Another major initiative is India Semiconductor Mission 2.0, launched to strengthen research and development and advanced semiconductor manufacturing.

Three new homegrown semiconductor plants are expected to begin operations this year. These efforts are part of a broader strategy to increase domestic value addition in electronics production and reduce reliance on imported components.

India’s electronics production is projected to reach USD 300 billion by 2026, with more than 99 per cent of mobile phones sold in the country now manufactured locally. Industry platforms are also playing a role in strengthening the sector.

The 11th India Electronics Expo (INDELXPO) 2026, centred on the theme “Bharat Tech”, reflects the country’s push to move from software dominance toward hardware resilience.

In addition to smartphones, manufacturers are expanding production in laptops, tablets and wearable devices. However, challenges remain.

Rising costs of imported components, logistical constraints and uncertainties linked to global geopolitical developments continue to pose risks to the industry’s growth trajectory.

Despite these headwinds, India’s electronics sector is steadily moving toward its ambitious $500 billion ecosystem goal, supported by policy incentives, growing domestic demand and expanding manufacturing capabilities.

Recent corporate developments also highlight structural shifts within the industry. In January 2026, Sony and TCL signed a memorandum of understanding to establish a joint venture for Sony’s home entertainment business, with TCL holding a 51 per cent stake.

The move reflects a broader realignment in the display segment, where manufacturing scale and brand value are increasingly being separated.

Meanwhile, companies are expanding AI-enabled features across product categories. Xiaomi launched the Redmi Note 15 series in international markets in early 2026, introducing AI-driven imaging capabilities and improved durability features in the mid-range segment.

These developments indicate that competition in the consumer electronics sector is gradually shifting from hardware specifications to AI capability, software ecosystems and cross-industry partnerships. Manufacturers are therefore investing more heavily in proprietary neural-processing architectures and integrated software platforms.

India’s strategic electronics sector, which includes defence, aerospace and security technologies, is also witnessing rapid growth. Supported by initiatives such as the National Policy on Electronics (2019) and the Make in India programme, the sector is evolving from assembly-based production to design-led manufacturing.

Strategic electronics play a critical role in strengthening national security, particularly in areas such as electronic warfare, C4ISR systems (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) and marine electronics.

Driven by digitalization and defense modernization, the sector is aimed at reaching a $400 billion valuation by 2025. To support domestic manufacturing, the government has introduced Production Linked Incentive (PLI) schemes, offering incentives of 4–6 per cent on incremental sales.

These schemes aim to offset high logistics and power costs and make India globally competitive in electronics production.

Electronics has already emerged as India’s third-largest export category, with shipments exceeding USD 22 billion in the first half of FY2025-26. Nevertheless, the sector continues to depend heavily on imports for critical components, with 85–90 per cent sourced from countries such as China, South Korea and Taiwan.

To address this vulnerability, the government has approved five major projects with investments of nearly Rs 1.52 lakh crore. Initiatives are underway to manufacture multi-layer printed circuit boards, camera modules and certain laminates domestically.