India Approves $2.7B Plan to Boost Local Electronics Manufacturing

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a $2.7 billion (₹22,919 crore) outlay to incentivize domestic manufacturing of electronic components in India. The initiative aims to encourage both domestic and foreign entities to establish local component manufacturing facilities with subsidies of up to 50% of the project costs.

Union Minister for Information Technology Ashwini Vaishnaw, in a briefing following the cabinet approval, stated that the six-year incentive plan is designed to attract investments worth $7 billion (₹59,350 crore) and facilitate the production of electronic components valued at $53.5 billion (₹4.6 trillion). Additionally, the initiative is expected to create approximately 91,600 jobs over its implementation period.

Focus Areas and Incentive Structure

The scheme will target key areas such as the sub-assembly of display and camera modules, printed circuit boards, lithium-ion battery cells, and enclosures for mobile and electronic hardware.

Applicants will be provided with turnover-based targets, determining the incentive structure in alignment with India’s semiconductor incentive schemes. Furthermore, the government aims to localize the manufacturing of components and capital goods used in electronics production through a capital expenditure-based incentive scheme. However, the incentives for such expenditures will be capped at less than 50% of a company’s investment, according to a senior government official.

Aiming for a $500 Billion Electronics Economy

Addressing the media, Vaishnaw highlighted that applicants will be required to meet a “minimum investment criteria” as part of the scheme. He also emphasized ongoing government efforts to introduce labour, customs, and taxation reforms to support the growth of electronics manufacturing in India.

“Within 10 years of manufacturing, we have achieved 20% value addition. Now, we must aim to double this in the next five years by producing both passive and active components. While active components will be developed through the semiconductor mission, passive components will be supported under the electronics components scheme,” Vaishnaw stated.

India currently manufactures electronics worth $120 billion and is targeting a $500-billion electronics economy by 2030. Additionally, the government is awaiting cabinet approval for its second semiconductor incentives scheme, which is expected to focus on the establishment of semiconductor component manufacturing and advanced fabrication units.

Industry Reactions and Future Prospects

Industry stakeholders have welcomed the move, calling it a positive step for both domestic and global investors.

Josh Foulger, President of Electronics at Zetwerk, expressed optimism about the scheme, stating that the company is actively engaging with partners and is open to collaborations to build a robust component ecosystem in India.

“This initiative will drive the growth of high-value electronics, enhance value addition, and create opportunities for innovation and employment,” he added.

Ajai Chowdhry, co-founder of HCL Technologies Ltd and Chairman of Epic Foundation, emphasized the broader impact of the scheme. “This will significantly enhance value addition in domestic electronics manufacturing and attract more investments in system products. The availability of locally manufactured components will also enable just-in-time manufacturing,” he noted.

Chowdhry also highlighted the importance of the upcoming ‘Design in India’ scheme, which aims to strengthen India’s semiconductor ecosystem. “We eagerly await the launch of the ‘Design in India’ scheme for chips and systems, which will help complete the full electronics manufacturing ecosystem,” he added.