From smartphones to semiconductors, India is building deeper supply chains
From smartphones to semiconductors, India is building deeper supply chains
From smartphones and electronic components to semiconductors, India is building the deeper supply chains needed to turn manufacturing scale into global competitiveness.
Palak Agarwal
- Sep 1, 2026,
- Updated Sep 1, 2026 7:36 PM IST
India’s electronics manufacturing story is entering a new phase. After smartphones, which became the symbol of the country’s manufacturing ambitions, the next battle is being fought deeper inside the value chain.
The shift is already visible. Electronics production has grown nearly seven-fold over the past decade, while exports have expanded more than 11-fold, according to EY Partner Saurabh Agarwal. Mobile phones have led the charge, with more than 99% of domestic demand now being met through local manufacturing. But the bigger question is whether India can build the ecosystem around those.
Advertisement
“The middle ground, which was earlier not fully evolved, is now getting set up,” says Pankaj Mohindroo, Chairman of the India Cellular & Electronics Association (ICEA). “The entire sub-assembly and component supply chain is getting established.”
That middle layer could prove critical to India’s ambitions of becoming an electronics hub. The government’s Electronics Components Manufacturing Scheme (ECMS), whose outlay was Rs 40,000 crore in the FY27 Budget, is aimed precisely at deepening this part of the supply chain. Industry response has been strong, with investment commitments significantly exceeding the scheme’s initial targets.
The opportunity extends well beyond smartphones. Mohindroo points to IT hardware such as servers, laptops, tablets, consumer electronics, air conditioners, wearables, lighting, auto electronics, and strategic and defence electronics as segments where manufacturing is beginning to gain traction.
Advertisement
India is also trying to build the foundation underneath this manufacturing base. Semicon 2.0, approved in July with a Rs 1.27-lakh crore outlay, broadens the semiconductor push towards equipment, materials, design, IP, and supply-chain capabilities.
For Agarwal, the transition is ultimately about areas where value is created. The transformation has been helped by one company more than most—Apple. Its India strategy has not only expanded iPhone manufacturing but has also brought a large supplier ecosystem into the country. More than 40 suppliers and ecosystem partners have established or expanded operations.
Mohindroo sees Apple’s entry as an inflection point, particularly after the initial wave of mobile-phone assembly between 2015 and 2019. As the domestic market matured and geopolitical tensions disrupted existing supply chains, Apple’s suppliers—including Foxconn, Pegatron and Wistron, followed by Tata Electronics’ expansion and acquisition—accelerated the development of manufacturing capacity and the supporting ecosystem.
Advertisement
That ecosystem is beginning to cluster geographically, with NCR/Noida, Bengaluru, Tirupati, and Sriperumbudur emerging as important manufacturing centres.
Yet the next challenge is competitiveness. Mohindroo believes India can become as competitive as Vietnam, or even more, by around 2030. China, however, remains a much tougher benchmark. Higher interest costs, industrial land costs and the sheer depth of China’s domestic supply chain—from rare earths and materials to semiconductors and finished products—continue to work against India.
“China is far more efficient,” he says, arguing that India still has to overcome a 3–5% point interest-cost disadvantage and other constraints.
The answer, however, may not be to move away from assembly too quickly. Mohindroo argues that India’s labour-cost advantage should be exploited to build scale across final products, while components and sub-assemblies expand alongside them. In his view, the two need to grow together.
This differs from the conventional narrative of moving from assembly to higher-value activities. Agarwal argues that India’s next phase must also involve greater ownership of product design, R&D and intellectual property. “India’s evolution into a global electronics hub hinges on where value is created,” he says. “While manufacturing drives jobs, creating a lasting leadership requires owning product design and intellectual property.”
Advertisement
That makes the next decade less about replacing assembly and more about building layers around it. India needs global electronics companies to manufacture and export from the country, domestic suppliers to deepen the component base, semiconductor plants to provide the foundation, and eventually Indian companies to develop globally competitive products and brands.
The ambition is considerable. Agarwal sees the potential for a $500-billion electronics industry by 2030, with exports exceeding $200 billion and domestic value addition crossing 30%. Mohindroo is even more bullish over the longer term, envisaging an $800-billion to $1-trillion industry by 2035.
For now, India’s electronics success has largely been measured by what comes out of its factories. The next phase will be determined by what goes into them, and how much of that value India can make.
@PalakAgarwal64
India’s electronics manufacturing story is entering a new phase. After smartphones, which became the symbol of the country’s manufacturing ambitions, the next battle is being fought deeper inside the value chain.
The shift is already visible. Electronics production has grown nearly seven-fold over the past decade, while exports have expanded more than 11-fold, according to EY Partner Saurabh Agarwal. Mobile phones have led the charge, with more than 99% of domestic demand now being met through local manufacturing. But the bigger question is whether India can build the ecosystem around those.
Advertisement
“The middle ground, which was earlier not fully evolved, is now getting set up,” says Pankaj Mohindroo, Chairman of the India Cellular & Electronics Association (ICEA). “The entire sub-assembly and component supply chain is getting established.”
That middle layer could prove critical to India’s ambitions of becoming an electronics hub. The government’s Electronics Components Manufacturing Scheme (ECMS), whose outlay was Rs 40,000 crore in the FY27 Budget, is aimed precisely at deepening this part of the supply chain. Industry response has been strong, with investment commitments significantly exceeding the scheme’s initial targets.
The opportunity extends well beyond smartphones. Mohindroo points to IT hardware such as servers, laptops, tablets, consumer electronics, air conditioners, wearables, lighting, auto electronics, and strategic and defence electronics as segments where manufacturing is beginning to gain traction.
Advertisement
India is also trying to build the foundation underneath this manufacturing base. Semicon 2.0, approved in July with a Rs 1.27-lakh crore outlay, broadens the semiconductor push towards equipment, materials, design, IP, and supply-chain capabilities.
For Agarwal, the transition is ultimately about areas where value is created. The transformation has been helped by one company more than most—Apple. Its India strategy has not only expanded iPhone manufacturing but has also brought a large supplier ecosystem into the country. More than 40 suppliers and ecosystem partners have established or expanded operations.
Mohindroo sees Apple’s entry as an inflection point, particularly after the initial wave of mobile-phone assembly between 2015 and 2019. As the domestic market matured and geopolitical tensions disrupted existing supply chains, Apple’s suppliers—including Foxconn, Pegatron and Wistron, followed by Tata Electronics’ expansion and acquisition—accelerated the development of manufacturing capacity and the supporting ecosystem.
Advertisement
That ecosystem is beginning to cluster geographically, with NCR/Noida, Bengaluru, Tirupati, and Sriperumbudur emerging as important manufacturing centres.
Yet the next challenge is competitiveness. Mohindroo believes India can become as competitive as Vietnam, or even more, by around 2030. China, however, remains a much tougher benchmark. Higher interest costs, industrial land costs and the sheer depth of China’s domestic supply chain—from rare earths and materials to semiconductors and finished products—continue to work against India.
“China is far more efficient,” he says, arguing that India still has to overcome a 3–5% point interest-cost disadvantage and other constraints.
The answer, however, may not be to move away from assembly too quickly. Mohindroo argues that India’s labour-cost advantage should be exploited to build scale across final products, while components and sub-assemblies expand alongside them. In his view, the two need to grow together.
This differs from the conventional narrative of moving from assembly to higher-value activities. Agarwal argues that India’s next phase must also involve greater ownership of product design, R&D and intellectual property. “India’s evolution into a global electronics hub hinges on where value is created,” he says. “While manufacturing drives jobs, creating a lasting leadership requires owning product design and intellectual property.”
Advertisement
That makes the next decade less about replacing assembly and more about building layers around it. India needs global electronics companies to manufacture and export from the country, domestic suppliers to deepen the component base, semiconductor plants to provide the foundation, and eventually Indian companies to develop globally competitive products and brands.
The ambition is considerable. Agarwal sees the potential for a $500-billion electronics industry by 2030, with exports exceeding $200 billion and domestic value addition crossing 30%. Mohindroo is even more bullish over the longer term, envisaging an $800-billion to $1-trillion industry by 2035.
For now, India’s electronics success has largely been measured by what comes out of its factories. The next phase will be determined by what goes into them, and how much of that value India can make.
@PalakAgarwal64
Read more!