India is strengthening its position as a global manufacturing hub, with value addition in electronics manufacturing having increased from 30 per cent to around 70 per cent, and is projected to reach 90 per cent by FY27, according to Axis Capital report.
With a new components policy in place, the country aims to increase value addition from the current 15-16 per cent to 40-50 per cent. Mobile phone exports have grown 77 times in the last 10 years. India has cut down its imports of fully built air conditioners (CBUs) from 35 per cent in FY19 to just 5 per cent in FY25.
Key parts like compressors, copper tubes, and aluminum coils are now made in India. In FY24, about 8.5 million RAC compressors were imported, but within the next 2-3 years, all of them are expected to be made locally. The demand for Printed Circuit Board Assembly (PCBA) has jumped in both business and consumer sectors, helped by higher import duties. Until 2016, India imported more electronics than it produced. But things have changed. Thanks to the "Make in India" push, local production is now about 24 per cent higher than imports (as of FY24).
Electronics exports are growing at a fast pace, with a compound annual growth rate (CAGR) of about 26 per cent from FY16 to FY25. Imports of mobile PCBAs, worth around ₹300 billion in FY18, have dropped to nearly zero in FY24. With new policies in place, India is now moving towards making more PCB and other electronic components within the country. India is quickly becoming a top choice for global electronics manufacturing and exports.
Government policies like the Production Linked Incentive (PLI), Phased Manufacturing Program (PMP), and Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), along with a skilled workforce and improving infrastructure, help the country to gain ground in the global supply chain. To attract manufacturers, the government has reduced the corporate tax rate to 15 per cent for new manufacturing units.
Combined with the global "China +1" strategy and easier export processes, India is now seen as a strong alternative for global companies. India is now the second-largest mobile phone producer in the world. Around 99 per cent of the phones sold in India are made locally.