A large talent pool, government subsidies, and geopolitical headwinds that forced several companies to diversify from China – these are some crucial elements that came together for global smartphone companies, like Apple and Samsung to set up production bases in India. After successfully being able to localise smartphone assembly in the country for domestic consumption and some exports, the government has shifted its focus to deepening local value addition in the sector.
The result: subsidy schemes that look at incentives on the components level – through the Rs 76,000 crore India Semiconductor Mission for chip fabrication and packaging, and the recently notified Rs 23,000 crore scheme for passive electronics components. Alongside the production linked incentive (PLI) schemes for smartphone and laptop assembly, the government has now launched support for practically all layers of electronics manufacturing, making the sector a crucial growth driver for the Indian economy.
The key target: driving up local value addition in the sector, reducing India’s import dependence on countries like China, and creating good quality jobs. Currently, the domestic value addition stands at around 15-20 per cent, with the government hoping to double that in the coming years (China’s current value addition in the sector is around 38 per cent). Worryingly, India’s trade deficit with China reached an all-time high in 2024-25, nearing $100 billion.
The electronics components manufacturing scheme
Earlier this month, the IT Ministry notified the Rs 22,919 crore incentive scheme for electronics components, which takes the baton forward from its two PLI schemes, which largely focus on the relatively easy assembly of electronics items like smartphones and computers.
Under the new scheme, spread over six years, the government is targeting localising manufacturing of components like display modules, sub assembly camera modules, printed circuit board assemblies, lithium cell enclosures, resistors, capacitors, and ferrites, among others. These are used in gadgets like smartphones and laptops, and appliances like microwave ovens, refrigerators and toasters, among others. So far, as smartphone and laptop assembly has grown in the country, so has the country’s dependence on China from where companies sourced internal components. The government wants to plug that gap.
It is hoping that at least 91,600 direct jobs will be created as part of the scheme, and has tied participating entities’ yearly subsidies to the number of jobs they create. The scheme is expected to generate production of Rs 4.56 lakh crore and bring in incremental investment of Rs 59,350 crore.
“Components import will reduce after this scheme. We need to come out of the import substitution mindset and go forward with export led promotion. Viability comes after large scale manufacturing. Electronics manufacturing is around $120 billion right now and we are targeting that to grow to $500 billion in the coming years,” Union IT Minister Ashwini Vaishnaw said earlier.
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How the PLI schemes are performing, what’s next
The smartphone PLI scheme has been among the most successful of the 14 such programmes launched in 2020 for several sectors. The IT hardware PLI, initially a laggard, got a booster shot from the government in 2023, with increased allocation of Rs 17,000 crore. Under these schemes, the government offers an incentive, which is linked to incremental sales.
As of February 2025, the PLI scheme for smartphones has generated:
Cumulative investment of Rs 10,905 crore
Cumulative production of Rs 7,15,823 crore
Cumulative exports of Rs 3,90,387 crore
Direct jobs for 1,39,670 people
In the same time frame, the PLI scheme for laptops and computers has generated:
Cumulative production of Rs 10,365 crore
Cumulative investment of Rs 522 crore
Direct employment for 5,132 people
The Indian Express had earlier reported that under the PLI scheme for smartphones, the government has disbursed close to $1 billion (Rs 8,700 crore) in the three years from 2022-23 to 2024-25, with Foxconn, Tata Electronics and Pegatron, the three contract manufacturers of Apple receiving cumulatively over 75 per cent of the amount. Now, the government is also considering whether incentives should be linked to metrics beyond incremental sales such as domestic value addition and incremental exports, as a next step to PLI schemes, which are nearing sunset in the next 1-3 years.