Currently, India is undergoing a digital revolution leading to a surge in the consumption of electronic devices in India. This growth is mainly attributed to the increasing middle-class population, rising disposable incomes and declining electronics prices in the country.
With this spike in demand for electronic products, the Electronics System Design & Manufacturing (ESDM) sector in India is expected to reach ~US$ 220 billion by 2025, expanding at a 16.1% CAGR between 2019 and 2025. India has a goal of producing 1 billion mobile handsets worth US$ 190 billion by 2025, with 600 million handsets worth US$ 110 billion targeted for exports. According to the IESA (India Electronics & Semiconductor Association), more than 90% of semiconductor companies globally have their R&D centres in India. The semiconductor R&D generates about US$ 2.5 billion in revenue and 6 lakh jobs in India.
The Electronics System Design & Manufacturing (ESDM) sector has seen some developments, investments and support from the Government in the recent past.
The cumulative FDI equity inflow in the Electronics industry is Rs. 49,068 crore (US$ 5.67 billion) during the period April 2000-September 2024.
India is one of the largest consumer electronics markets in the Asia Pacific Region and is home to considerable talent for electronic chip design and embedded software. India has committed to reach US$ 300 billion worth of electronics manufacturing and exports of US$ 120 billion by 2025-26.
The Indian automotive industry has crossed the US$ 238.32 billion (Rs. 20 trillion) mark in FY24, contributing 14-15% of the total GST collected.
India's electronics industry is targeting a manufacturing output of Rs. 4,310,000 (US$ 500 billion) by 2030, which requires a fivefold increase in production. This growth is also expected to create 12 million jobs by 2027.
In FY24, the exports of electronic goods were recorded at US$ 29.11 billion as compared to US$ 23.57 in FY23.
Major Government initiatives such as ‘Digital India’, ‘Make In India’, and supportive policies including a favorable FDI Policy for electronics manufacturing have simplified the process of setting up manufacturing units in India.
India is the second fastest digitizing economy amongst the 17 leading economies of the world. The Government of India aims to make Electronics Goods amongst India’s 2-3 top-ranking exports by 2026. Electronic goods exports are expected to increase from the projected US$ 15 billion in 2021-22 to US$ 120 billion by 2026.
The Union Budget 2023-24 allocated Rs. 16,549 crore (US$ 2 billion) for the Ministry of Electronics and Information Technology, which is nearly 40% higher on year. The budget for FY23 had allocated Rs. 14,300 crore (US$ 1.73 billion) for the IT ministry.
The government allocated investment of Rs. 8,803 crore (US$ 1.06 billion) has been made under the scheme for promotion of manufacturing of electronic components and semiconductors.
India committed to reach US$ 300 billion worth of electronics manufacturing and exports by 2025-26. Artificial Intelligence is expected to add US$ 967 billion to the Indian economy by 2035 and US$ 450–500 billion to India’s GDP by 2025, accounting for 10% of the country’s US$ 5 trillion GDP target.
The Government is promoting the development of Electronics Manufacturing Clusters (EMCs) throughout the Country to provide world-class infrastructure and facilities. India is home to considerable talent for electronic chip design and embedded software.
Reliance Industries is set to build the world’s largest data centre in Jamnagar, Gujarat, marking a major step in its entry into India's Artificial Intelligence (AI) sector. The company has procured AI semiconductors from Nvidia to power this project following a collaboration announcement at October 2024 Nvidia AI Summit.
Apple is engaged in discussions with Bharat Forge to establish a partnership, potentially designating the company as a supplier for the manufacturing of components such as mechanical parts.
FollowG has introduced an AI-powered application for the Open Network for Digital Commerce (ONDC), designed to assist small and medium-sized electronics retailers by facilitating connections with buyers across the country.
In July 2023, electronics maker Elista announced that it would invest Rs. 100 crore (US$ 12.1 million) in Andhra Pradesh to set up a manufacturing unit for Smart LED TVs, smartwatches, audio speakers, and large appliances.
US CHIP design major Advanced Micro Devices (AMD) will invest up to US$ 400 million in India over the next five years and will set up its biggest design facility in the country.
The Index of Industrial Production of manufacturing of computer, electronic, and optical products (weight : 1.57%) was valued at 137, during FY23.
India's electronics sector is set to harness US$ 7 billion untapped revenue by 2035 via circular business model and policy pathways, industry stakeholders said. Current commitments and targets set the projected market size for these circular models at US$ 13 billion in 2035.
India emerged as the second-largest manufacturer of mobile phones in the world, with a production value of mobile devices reaching US$ 49.16 billion in 2024.
The ‘Make In India’ initiative's mobile phone shipments from India exceeded 2 billion cumulative units and an annual growth rate of 23% was recorded.
According to a report 'India Monthly Wearable Device Tracker' by International Data Corporation (IDC), "hundreds" of smartwatch model launches in the first half of the calendar year 2023 contributed to India's wearable market's growth of 53.3% year-over-year (YoY). The companies shipped 57.8 million units of wearables like smartwatches, earwear, and eyeglasses to the market in the first half of CY23.
The Ministry of Electronics and IT (MeitY) announced the exchange of signing of a Memorandum of Understanding (MoU) between the Centre for Nano Science and Engineering (CeNSE) at the Indian Institute of Science (IISc), Bengaluru and Lam Research India at the SemiconIndia in Gandhinagar.
India Semiconductor Mission organized a three-day SemiconIndia 2023 Conference in July 2023 with the theme ‘Catalysing India’s Semiconductor Ecosystem’ in Gandhinagar, Gujarat. In March 2023, the Government approved the setting up of the Electronics Manufacturing Cluster (EMC) at Hubli-Dharwad in Karnataka, worth Rs. 180 crore (US$ 22 million) and is expected to create about 18,000 jobs.
In FY23, India manufactured wearables such as earphones and smartwatches worth Rs. 8,000 crore (US$ 976.7 million), boosted by the implementation of a Phased Manufacturing Plan (PMP). The industry is hopeful of doubling the production to Rs. 15,000-17,000 crore (US$ 1.83-2.07 billion).
As global companies are leveraging the well-developed manufacturing system in the State, Tamil Nadu has emerged as one of the major electronics hardware manufacturing and exporting States in the country. The state is well positioned to achieve a US$ 100 billion ESDM industry in the next five years.
In November 2023, Mr. Ashwini Vaishnaw, Union Minister of Communications & IT said that 99% of mobiles used in India are made in India.
Industrial robot accessories company Robot System Products (RSP) has announced plans to set up a subsidiary in India. The Indian entity Scandinavian Robot Systems India Private Limited has been registered in Chennai and will supply a range of industrial robot accessories to Indian customers.
On February 15, 2024, the Ministry of Electronics and Information Technology (MeitY), in collaboration with the National Institute of Electronics and IT (NIELIT), organized the inaugural Future Skills Summit in Guwahati. The Summit convened India's most talented individuals to discuss strategies for shaping the future of talent in the country.
In November 2022, Voltas entered into a technology license agreement with Denmark’s Vestfrost Solutions to develop, manufacture, sell and service medical refrigeration and vaccine storage equipment including ice-lined refrigerators, vaccine freezers and ultra-low temperature freezers to the Indian market.
In September 2022, MeitY Startup Hub (MSH), an initiative of the Ministry of Electronics & Information Technology (MeitY), and Meta announced the launch of an accelerator programme to support and accelerate XR technology startups across India.
The Indian startup ecosystem is experiencing a surge over the years, due to rapid technological advancements, increasing internet penetration, growing digital infrastructure, rising startup culture, government initiatives like Digital India, Make in India, and Startup India, as well as a large pool of skilled workforce.
India has witnessed an exceptional surge in the creation and funding of startups as the country has solidified its position as a major global centre for innovation and businesses. However, securing adequate funding remains a significant task for startups, often leading to survival challenges.
In 2023, the funding scenario for tech startups turned bleak amid the global uncertainty, witnessing a 67% YoY plunge in total funding to US$ 6.0 billion. This decline came after the peak funding levels observed in 2021 (US$ 24.1 billion) and 2022 (US$ 18.2 billion), where investors displayed confidence in Indian tech startups. In 2023, the number of deals declined to 824. However, the decline appears to be cyclical than a long-term trend.
The inaugural Future Skills Summit was organized by the Ministry of Electronics and Information Technology (MeitY) in collaboration with the National Institute of Electronics and IT (NIELIT) in Guwahati on February 15, 2024.
STPI Signs MoUs to Strengthen Tech Startup Ecosystem: AIC STPINEXT Initiatives (STPINEXT), a special purpose vehicle of Software Technology Parks of India (STPI), an organisation under the Ministry of Electronics and Information Technology (MeitY) has signed two Memorandums of Understanding (MoUs), one with HDFC Bank, and another with Excelpoint Systems India Pvt. Ltd., a niche technology player for fostering entrepreneurship and nurturing tech startups in the country. These partners would play a critical role in supporting and handholding the startups in the growth journey through technical guidance & assistance, mentoring, pitching to investors, funding support, and market connect & access etc.
Voltas announced plans of Rs. 400 crore (US$ 50.10 million) capex under the PLI scheme to manufacture components for white goods in May 2022.
Ministry of Electronics & Information Technology (MeitY) has announced the “Scheme for Promotion of Semiconductor Ecosystem” in India with a massive outlay of Rs. 76,000 crore (US$ 9.48 billion) in 2022.
As per the Union Budget 2022-23, the Ministry of Electronics and Information Technology (MeitY) has been allocated Rs. 14,300 crore (US$ 1.73 billion).
In the allocated budget, revenue expenditure allocation is Rs. 13,911.99 crore (US$ 1.8 billion) and capital expenditure allocation is Rs. 388.01 crore (US$ 50.4 million).
India has made substantial cuts to import duties on mobile phones to enhance exports. In the last financial year, mobile phone exports reached Rs 1.2 lakh crore (US$ 14.4 billion), and this upward trend is expected to persist.
About 80% of the Production-Linked Incentive scheme (PLI) to encourage manufacturing in the country, which covers 14 industries and has a total investment of Rs. 3 lakh crore (US$ 38.99 billion) is concentrated in only three sectors: electronics, automobiles, and solar panel production.
The government allows 100% FDI in the ESDM sector through an automatic route to attract investments, including Original Equipment Manufacturers (OEMs) and Integrated Device Manufacturers (IDMs). The government has set a target to get ~Rs. 18,000 crore (US$ 2.4 billion) investments in the electronics manufacturing segment by 2021-22.
Production Linked Incentive Scheme (PLI), one of the significant incentive schemes, is aimed at boosting domestic manufacturing of mobile phones and their components, including Assembly, Testing, Marking and Packaging (ATMP) units. As a part of this scheme, ~US$ 5.7 billion (Rs. 420 billion) will be extended as an incentive of 4-6% on incremental sales (of goods manufactured locally) for five years.
The Indian government has disbursed Rs. 1,596 crore (US$ 184.33 million) under the Production-Linked Incentive (PLI) schemes for six sectors, including electronics and pharma, during the H1 of the FY25 (April-September 2024).
In March 2024, the Cabinet approved a massive US$ 15.2 billion (Rs. 1.26 trillion) investment in three semiconductor plants, signifying India's technological progress.
In May 2021, the cabinet, chaired by Prime Minister Mr. Narendra Modi, approved a proposal by the Department of Heavy Industries and Public Enterprises to implement the Production-Linked Incentive (PLI) scheme 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ to achieve manufacturing capacity of 50 GWh (Giga Watt Hour) of ACC and 5 GWh of ‘Niche’ ACC, with an outlay of Rs. 18,100 crore (US$ 2.47 billion).
On November 11, 2020, the Union Cabinet approved the Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) to boost India’s manufacturing capabilities, and exports and promote the ‘Atmanirbhar Bharat’ initiative.
For growth industries, such as consumer electronics, electric vehicles and renewable energy, Advanced Chemistry Cell (ACC) battery production represents one of the biggest economic opportunities. PLI scheme for the ACC battery would allow key domestic and international players to set up a competitive ACC battery plants in the region.
The Department of Empowerment of Persons with Disabilities (DEPwD) has signed a Memorandum of Understanding (MoU) with the Electronics Sector Skills Council of India (ESSCI) to enhance the empowerment and skill development of Persons with Disabilities (PwDs).
Under the PLI scheme for IT Hardware, the approved enterprises are estimated to manufacture equipment worth > US$ 21.62 billion over the next four years. Of the total production, foreign companies have suggested production worth US$ 11.38 billion, whereas domestic enterprises have planned a production of US$ 10.20 billion.
For skill development in the ESDM sector, we have organisations such as the Electronics Sector Skills Council of India, the National Institute of Electronics & Information Technology, Ajmer, India Electronics and Semiconductor Association.
The Electronics Sector Skills Council of India (ESSCI) aims to facilitate a world-class ecosystem for developing a future-ready workforce in the Electronics System Design & Manufacturing Sector. Its mission is to become a global leader in skill development in Electronics by aligning to the product lifecycle – Design, Manufacturing & Service through blended Skilling, R&D, Innovation & adoption of state-of-the-art technologies to reach the masses and lead to the growth of the ESDM sector.
The Government of India launched the 'Scheme for financial assistance to select states for skill development in the ESDM sector' in November 2013. The scheme was aimed at enhancing the skilling capacities in the ESDM Sector through the public and private sectors for students/unemployed youth belonging to other disciplines.
India Electronics and Semiconductor Association (IESA) aims to grow the ESDM & electronics business segment in India & make India the preferred destination for electronics & semiconductor design & manufacturing.
India Electronics and Semiconductor Association (IESA) acts as a trusted knowledge partner to the Central & State Governments helping device policies & incentives for the ESDM industry to help attract investments into India. In order to promote technology solutions to positively impact the lives of 1.3 billion Indian citizens is a key aim of IESA, which it achieves by bridging the gap between academia & industry to bring innovations faster to market.
The future outlook of the Electronics System Design & Manufacturing (ESDM) sector looks on track with the pandemic easing out.
To support the ESDM sector and its growth path, the government has made electronics production a vital pillar of many initiatives such as 'Make In India', 'Digital India' and 'Start-up India'. The ESDM sector holds a position of crucial importance in the government's goal of generating US$ 1 trillion of economic value from the digital economy by 2025. The high internet penetration rate and India’s position as the second-largest smartphone manufacturer worldwide are expected to boost the penetration of electronic products, which in turn will drive the ESDM market. The Indian electronics manufacturing industry is projected to reach US$ 520 billion by 2025. The electronics sector is expected to nearly double in contribution to the GDP in the next few years, owing to increased support from the government to domestic manufacturing.
