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Contribution to Economy: Large-Scale Electronics Manufacturing in India

Contribution to Economy: Large-Scale Electronics Manufacturing in India

The global electronics industry was estimated to be $2.9 trillion in 2020. Despite the worldwide disruption caused by COVID-19, consumer electronics market continues to experience a robust growth. The Indian electronics system design and manufacturing (ESDM) sector is one of the fastest growing sectors in the economy and is witnessing a strong expansion in the country.

India’s electronic industry is growing at a compounded average growth rate of 14%, with India being the third largest consumer of electronics and fifth largest producer. Despite a growing demand for consumer electronics, the sector contributes only 3.4 % of the country’s GDP.

The government has committed nearly US$ 17 billion over the next six years across four PLI Schemes: Semiconductor and Design, Smartphones, IT Hardware and Components.

The major products that are expected to drive growth in India’s electronics manufacturing are mobile phones, IT hardware (laptops, tablets), consumer electronics (TV and audio), industrial electronics, auto electronics, electronic components, LED lighting, strategic electronics, printed circuit board assembly, wearables and hearables, and telecom equipment.

Contribution to the GDP

Mobile manufacturing will lead the industry growth (accounting for about 40% of the growth) and is expected to cross US$ 100 billion in annual production from the current US$ 30 billion.

The IT sector contributes nearly 9% to the GDP. The industry is around US$ 194 billion and is expected to surpass US$ 300-350 billion by 2025. India’s IT industries and companies are majorly located in the southern regions such as Bangalore, Hyderabad, Chennai, Visakhapatnam, Trivandrum, Mysore, Mangalore, Kochi, etc.

States focusing on Electronics System Design & Manufacturing (ESDM)

Export Trends

India’s export of electronic goods stood at US$ 2,009.07 million in September 2022, an increase of 71.99% Year-on-Year. Mobile phones, IT hardware (laptops, tablets), consumer electronics (TV and audio), industrial electronics and auto electronics are key export products in this sector.

As per the Ministry of Electronics & IT vision, India’s electronics industry exports are expected to increase to US$ 120 billion by 2026.

The top 5 destinations for Indian electronic goods exports are: USA, UAE, China, Netherlands and Germany. USA is the largest importer of India’s electronic exports followed by UAE, accounting for 18% and 17% of the overall exports, respectively. South Asia, Africa and Middle East are key importing countries for mobile phones from India.

For the IT services of India, the top 3 export destinations of India are USA, UK and EU. The country also exports these services to Asia Pacific regions, Latin Americas and Middle East Asia and sees new opportunities emerging to expand services to continental Europe, Japan, China and Africa.

As per Reserve Bank of India (RBI) statistics, software services exports to USA and Canada account for 55.5% of the overall exports. This is followed by Europe, with exports valued at US$ 48.6 billion in 2021-22. UK is the largest importer of Indian software services within EU region, accounting for 48% of exports to EU. Asia region exports of Indian software services were valued at US$ 10.2 billion, with a major share of East Asia exports valued at US$ 9 billion.


As of September 2022, the PLI scheme for LSEM has attracted investment of Rs 4,784 crore, and led to total production of Rs 2,03,952 crore, including exports of Rs 80,769 Crore. Electronics manufacturing is expected to rise to USD 300 billion by 2025-26.

As a result of government initiatives and industry’s efforts, India has made rapid advances in the past five years in the field of electronics manufacturing. The production of mobile phones has risen from about 6 crore in 2014-15 to approximately 31 crore in 2021-22.  The export of mobile phones has also seen a sharp increase. India exported Rs 45,000 crore worth of mobile phones in FY 2021-22 and during the current year up to November 2022, mobile phone exports have already crossed Rs 40,000 crore, which is more than double the exports made during the same period last year.

The PLI for Large-Scale Electronics Manufacturing sector has attracted leading global players, including Foxconn, Samsung, Pegatron, Rising Star and Wistron while leading domestic companies, including Lava, Micromax, Optiemus, United Telelinks Neolyncs and Padget Electronics, have also participated in this scheme.

Some of the investments/ developments in the Electronics System Design & Manufacturing (ESDM) sector in the recent past are as follows:

  • FDI inflows in the Electronics and Electrical Equipment reached US$ 14.76 billion between April 2000 – June 2022.
  • 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 to the India market.
  • Voltas announced plans of Rs. 400 crore (US$ 50.10 million) capex under PLI scheme to manufacture components for white goods in May 2022.
  • In March 2022, Reliance announced that it would invest US$ 220 million in a joint venture with Sanmina Corp, a US- listed company for making electronic products in the Asian countries.
  • According to sources, Apple Inc. in 2021 manufactures 70% of mobile phones sold in India, a sharp increase from 30% recorded two years ago.
  • In September 2021, Lenovo announced plans to ramp up manufacturing capabilities in India across various product categories, such as PCs, notebooks and smartphones, due to rising consumer demand. However, details of the investment were not disclosed.
  • In September 2021, PG Electroplast, a contract manufacturer of electronic goods, announced that it had applied for a PLI scheme and pledged to invest Rs. 300 crore (US$ 40.47 million) towards the production of air conditioner components.
  • Intel has invested over US$ 7 billion in design and R&D facilities in the country to date.
  • 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.
  • On February 16, 2021, Amazon announced that it will commence manufacturing of electronics products from India with Cloud Network Technology, a subsidiary of Foxconn in Chennai. With this, we will be able to produce ‘Fire TV Stick’ devices in large quantities every year, catering to demands of customers in India.


The sector employed about 5.1 million people directly and roughly 12 million people indirectly in FY21. Direct employment in the sector has increased by 28% since 2017.

Rashmie Parmour
Rashmie Parmour is currently pursuing PhD from Mumbai School of Economics and Public Policy, working as PGT Economics in Navy Children School. Her keen interest include education, health, and macroeconomics.

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