Will India reach US$500 B in electronics production by 2030?

India is targeting US$500 B in electronics production by 2030. Last year July, Niti Aayog said in a report that India should be looking at a target of US$500 B in electronics production by 2030, a US$4.3 trillion market dominated by countries like China, Taiwan, US, South Korea, Vietnam and Malaysia.

While India is gearing up to become the foremost manufacturing hub in the world, is the window of opportunity as wide open as is required?

“India currently exports approximately $25 billion annually, representing less than 1 per cent of the global share despite 4 per cent share in global demand. To enhance competitiveness, India needs to localise high-tech components, strengthen design capabilities through R&D investments and forge strategic partnerships with global technology leaders,” a Niti Aayog statement said.

Read more: India attracts businesses from UK, Norway, Taiwan & US while expanding to Dubai & Turkey

According to a report by Rubix Data Sciences, Government of India initiatives like the Production Linked Incentive (PLI) scheme have attracted investments of over US$ 17 billion, driving growth across key sectors including mobile phones, semiconductors, and consumer electronics.

This is especially true for growth in the manufacturing of smartphones. India’s mobile phone exports grew by over 40% in FY2024 to USD 15.6 billion. Domestic value addition in mobile manufacturing increased from 6% in 2017 to 16% in 2023, with aspirations to reach 50% by 2030.

India manufactures smartphones for Chinese brands like Oppo, One Plus, Realme, Vivo, Xiaome, along with local brands like Micromax, Lava, and Intex Technologies. In fact, India became the second largest smartphone maker globally in 2024.

India can also benefit from the China Plus One advantage, which is causing supply chains to shift to hubs other than China. Global players such as Apple and Samsung are capitalizing on India’s growing manufacturing ecosystem. Tamil Nadu alone has seen electronics exports grow exponentially, from USD 1.66 billion in FY2021 to USD 9.56 billion in FY2024.

Already, in 2024, Apple has been manufacturing all four models of its latest iPhone 16 lineup, which includes the premium Pro models. Apple exported about US$6 billion worth of made-in-India iPhones last year, a growth of 30% from the year before.

In September, the company reportedly started the production of the complete range of its latest iPhone16 in India. The company also plans to increase its workforce in the country to 600,000 employees.

Samsung too has been looking towards India for mobile phone manufacturing. The Korean cell phone major has been manufacturing its Galaxy S24 series in its Noida factory, which is one of the biggest in the world.

Semiconductor manufacturing is another domain that India can gain an upper hand on. India’s semiconductor market is projected to reach US$ 109 billion by 2030, carried forward by several local and foreign projects. Last year, Microchip Technologies Incorporated and UK-based conglomerate SRAM & MRAM Group, invested in their semiconductor set up in India. Local companies like Tata Electronics’ fabrication plants and Micron Technology’s USD 2.75 billion ATMP facility have also been adding to the semiconductor business. Polymatech Electronics These initiatives aim to localize production and reduce the reliance on imports.

Is India ready to reach US$500 B by 2030?

While India is gearing up to become the foremost manufacturing hub in the world, is the window of opportunity as wide open as is required?

Certain deterrents remain in India’s path. For example, India’s local manufacturing has grown, but it still depends on imports for high-value components such as semiconductors, Printed Circuit Board Assemblies (PCBAs), and chipsets, resulting in a significant trade imbalance. As per the Rubix Data Sciences report, in FY2024, electronics imports from China alone surpassed USD 12 billion.

Also, India’s average electronics tariff rate of 7.5% results in a 5% to 6% cost disadvantage in assembly and a 4% to 5% disadvantage in component manufacturing compared to competitors like Vietnam and Malaysia. Consequently, this leads to a 10% to 14% cost disability in assembly and 14% to 18% in component manufacturing.

India’s investment in Research & Development (R&D) is at just 0.64% of India’s GDP, compared to 2.41% in China and 5.71% in Israel. This confines advances in crucial areas like semiconductors and Internet of Things (IoT) devices.

Read more: Ecosystem harkat: Govt. collab for entrepreneurship & innovation with support for fintech startups, pre-seed investments & for 21,000+ women entrepreneurs

Also, India has seen success in assembly operations, but component manufacturing is still in its early stages. High-complexity components, such as silicon chips, continue to be imported extensively, meeting 64% of the demand in the automotive electronics sector alone.

What this mean for business is that India’s manufacturing sector presents both opportunities and challenges. There are tremendous growth opportunities in areas like mobile device and semiconductor manufacturing. However, to unlock the sector’s full potential, structural issues such as tariff complexity, R&D gaps, and infrastructure development need to be addressed.