India’s electronics manufacturing sector is poised for a significant leap forward, with manufacturers committing close to ₹3 trillion (US$40 billion) in capital expenditure over the next five years. This surge in investment is driven by a combination of factors, including government incentive schemes, a growing domestic market, and the potential for exports.
Government Incentives Fueling Growth
The Indian government has launched several initiatives to attract investment in the electronics sector. These include the Production-Linked Incentive (PLI) scheme, which offers financial support to companies that set up manufacturing facilities in India, and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS).
The PLI scheme has been particularly successful in attracting investment. The ₹76,000 crore (US$10 billion) incentive package for semiconductors has already received approval for four major projects, backed by giants like Micron, the Tata Group, and CG Power. These projects, with a combined investment of around ₹1.5 trillion (US$20 billion), are expected to create a robust domestic semiconductor manufacturing ecosystem.
Major Players Ink Investment Deals
Leading electronics manufacturers, both domestic and international, are participating in this growth story. iPhone maker Foxconn has committed to investing $1.5 billion (US$20 billion) in its Indian operations, while Vedanta Group is planning a $20 billion investment over the next four years in electronics, semiconductors, and glass production.
Even smaller contract manufacturers are ramping up their operations. Dixon Technologies, which manufactures a range of products from smartphones to televisions, is planning a capex of ₹1,800 crore (US$2.4 billion) in the next three years. Similarly, Amber Enterprises, a manufacturer of consumer durables, is looking to invest ₹350-375 crore (US$460-500 million) in FY25 to establish printed circuit board (PCB) manufacturing facilities.
Domestic Demand and Export Potential
The growth in electronics manufacturing is not just driven by government incentives. India has a large and rapidly growing domestic market for electronics, estimated to reach $500 billion by 2030 according to the Confederation of Indian Industry (CII). Additionally, the country has the potential to become a major exporter of electronics, similar to Vietnam whose electronics exports are valued at $40 billion compared to a domestic market of $2 billion.
Looking Ahead: Challenges and Opportunities
While the outlook for India’s electronics manufacturing sector is positive, there are still challenges to overcome. Experts believe that sustaining the current level of government support will be crucial to establishing India as a global manufacturing hub. Additionally, developing a skilled workforce and creating a robust supply chain infrastructure will be essential for long-term success.
Despite these challenges, the future of electronics manufacturing in India appears bright. With continued government support, a growing domestic market, and a focus on exports, the country has the potential to become a major player in the global electronics industry.
