Value Addition in Electronics Manufacturing in India Set to Hit 90% by FY27

India is rapidly consolidating its position as a global electronics manufacturing hub, driven by a significant increase in domestic value addition and robust export growth, according to a recent report by Axis Capital.

The value addition in electronics manufacturing has surged from 30% to nearly 70% and is expected to reach 90% by the financial year 2026–27 (FY27). A new components policy is expected to further accelerate this progress, aiming to raise value addition in key electronic components from the current 15–16% to 40–50%.

One of the most notable success stories is in mobile phone manufacturing, where exports have increased by 77 times over the last decade. India has now become the second-largest mobile phone producer globally, with approximately 99% of mobile phones sold in the country being manufactured locally.

The country has also drastically reduced its reliance on imports of completely built units (CBUs) of air conditioners—from 35% in FY2019 to a mere 5% in FY2025. India is now manufacturing critical components such as compressors, copper tubes, and aluminum coils domestically. While around 8.5 million room air conditioner (RAC) compressors were imported in FY24, it is expected that domestic production will meet the entire demand within the next two to three years.

The demand for Printed Circuit Board Assembly (PCBA) has surged across both business and consumer sectors, supported by increased import duties that incentivize local production. Notably, mobile PCBA imports, which stood at approximately ₹30,000 crore in FY2018, have declined to nearly zero by FY2024, reflecting a strategic shift toward domestic manufacturing.

Before 2016, India was a net importer of electronics, but the scenario has now reversed. As of FY24, local production exceeds imports by approximately 24%, fueled by initiatives under the "Make in India" campaign.

Electronics exports have also witnessed a strong upward trajectory, recording a compound annual growth rate (CAGR) of about 26% from FY2016 to FY2025.

This transformation has been underpinned by supportive government initiatives, including the Production Linked Incentive (PLI) Scheme, the Phased Manufacturing Program (PMP), and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS). Combined with an increasingly skilled workforce and improving infrastructure, these policies have positioned India as a key player in the global electronics supply chain.