India’s $626M Bet to Break China’s Electronics Grip

According to CNBC, India has approved the first seven projects under its $2.7 billion Electronics Component Manufacturing Scheme, allocating 55.32 billion rupees ($626 million) in grants to reduce import dependency. The initiative comes as India’s electronic goods exports reached $38.56 billion in fiscal year 2025, nearly offset by $36.8 billion in component imports with 40% coming from China. The approved projects will manufacture camera modules, multi-layered printed circuit boards, and advanced high-density PCBs for smartphones, wearables, medical devices, and aerospace components. India’s Minister for Electronics & IT Ashwini Vaishnaw stated these plants will meet 20% of domestic PCB demand and 15% of camera module needs, with 60% of production destined for export. This strategic move represents India’s most ambitious effort yet to build domestic electronics manufacturing capacity beyond final assembly.

The Global Supply Chain Realignment

India’s push comes amid a fundamental restructuring of global electronics supply chains that began during the COVID-19 pandemic and accelerated through geopolitical tensions. The electronics industry has historically concentrated manufacturing in East Asia, particularly China, which dominates approximately 60% of the $1.8 trillion global market according to EY data. What makes India’s timing strategic is that multinational corporations are actively seeking manufacturing alternatives beyond China, creating a window of opportunity that didn’t exist five years ago. Apple’s shifting production to India, resulting in $12.8 billion in exports from the country in 2024, demonstrates this trend is already underway. However, without robust local component manufacturing, India risks remaining an assembly hub rather than developing true manufacturing sovereignty.

The Technical Manufacturing Hurdles

Building domestic capacity for advanced electronic components represents a significantly greater challenge than mobile phone assembly. High-density printed circuit boards and camera modules require sophisticated manufacturing processes, specialized materials, and precision engineering that India’s manufacturing ecosystem has yet to fully develop. The technology gap between assembling finished products and manufacturing their core components is substantial – it’s the difference between putting together a puzzle and creating the puzzle pieces themselves. Success will depend not just on capital investment but on developing the entire value chain, from raw material processing to precision manufacturing equipment and specialized workforce training. The government’s announcement indicates recognition of this complexity, but execution will require years of sustained investment and technical development.

Geopolitical and Economic Implications

The timing of this initiative reflects broader geopolitical calculations as both the U.S. and China implement export controls on critical technologies. India is positioning itself as a reliable alternative to China in the global electronics supply chain at a moment when Western nations are actively seeking to diversify their sourcing. The fact that 60% of production from these new plants is targeted for export suggests India aims to become not just self-sufficient but a global supplier. This aligns with the country’s broader manufacturing ambitions under initiatives like “Make in India” and represents a strategic bid to capture market share during a period of supply chain realignment. However, competing with China’s established manufacturing ecosystem, which benefits from decades of development and massive scale, will require more than government subsidies – it demands competitive quality, pricing, and reliability.

Realistic Outlook and Challenges

While the ambition is clear, the path forward contains significant obstacles. The $150 billion domestic components market projected by 2030 represents massive growth from current levels, requiring consistent policy support, infrastructure development, and private sector commitment. The 249 applications representing nearly $14 billion in proposed investments indicate strong interest, but converting proposals into operational factories is where previous Indian manufacturing initiatives have stumbled. Critical success factors will include developing supporting industries for specialized materials, creating efficient logistics networks for just-in-time manufacturing, and building technical education programs to supply the required skilled workforce. If successful, this initiative could transform India from an assembly destination to a true manufacturing powerhouse, but the transition will likely take the remainder of this decade and require sustained commitment beyond initial government grants.