From assembly to ambition: How India is building its electronics backbone

India exported $38.5 billion worth of electronic goods in FY2025. Sounds impressive, right? Now consider this: we imported $36.8 billion worth of electronic components in just the first half of that same year. Nearly 40% of those component imports came from China.

We have been assembling electronics, not manufacturing them. That is now changing.

The Problem with Assembly

Think of it like this. If you run a restaurant but buy every ingredient, the spices, the oil, the flour, the vegetables, from one supplier, you do not really control your kitchen. You are just plating the food. One supply disruption and your restaurant shuts down.

That has been India’s electronics story so far. We became the world’s second-largest mobile phone manufacturer. But 80-85% of the components inside those phones, the chips, the PCBs, the camera modules, the displays, were imported. The value addition happening in India was a thin 15-18%. The rest of the money was flowing out.

The PLI scheme fixed the top of the pyramid, finished phones, laptops and IT hardware. Production went from Rs 1.9 lakh crore in FY2015 to Rs 11.3 lakh crore in FY2025, a six-fold jump in a decade. But the base of the pyramid, the components, remained hollow.

Enter ECMS

The Electronics Components Manufacturing Scheme was launched in April 2025 to fix exactly this. And it is moving fast.

The government has cleared 29 more proposals under ECMS, bringing fresh investment of Rs 7,104 crore and projected production of Rs 84,515 crore. These 29 proposals alone will create over 14,000 direct jobs.

Here is how the overall ECMS numbers look now:

• Total approved applications: 75
  
• Total expected investment: Rs 61,671 crore
  
• Total expected direct employment: 65,040 people
  
• Earlier 46 approvals: Rs 54,567 crore investment
  
• Latest 29 approvals: Rs 7,104 crore investment
  

The Union Budget 2026-27 enhanced the ECMS outlay to Rs 40,000 crore. That is a serious signal from the government that this is not a token scheme. They want scale.

What is Actually Being Made

This is where it gets interesting for investors. The 29 new approvals cover 16 product segments, and these are not obscure items. They are the building blocks of every electronic device you use:

• Display modules: Dixon Display Technologies, Wangda Technologies
  
• Connectors: Molex India, Amphenol FCI, SFO Technologies
  
• Li-ion cells: Munoth Lithium Battery
  
• Inductors: TDK India
  
• Flexible PCBs: Syrma Strategic Electronics
  
• Copper-clad laminates: Syrma Components, Ratnaveer Precision Engineering
  
• Metallised films: Dhruv Industries
  
• Rare earth permanent magnets: Lohum Cleantech
  

Three firsts stand out. India’s first SMD passive plant for tantalum-based capacitors, first flexible PCB plant, and the first rare earth permanent magnet facility manufacturing from rare earth oxides, with fully indigenous technology.

Why Rare Earths Matter

I want to spend a moment on the rare earth magnet approval because most people will gloss over it. Rare earth permanent magnets are critical for electric vehicle motors, wind turbines, defence electronics, and clean energy technology. Global supply is concentrated almost entirely in China. In a world where both the US and China are using export controls as weapons, having your own rare earth-to-magnet capability is not a luxury, it is a strategic necessity.

Lohum Cleantech’s Rs 700 crore project is expected to meet about 25% of India’s domestic demand. That is a start. But the fact that we are building this capability from oxide to finished magnet, not just processing imported semi-finished material, is significant.

The Bigger Strategic Shift

What I find most encouraging is the shift in how we are thinking about electronics manufacturing. Four priority areas have been outlined:

• In-house design capability (not just assembly)
  
• Domestic supply chain with buyer-seller linkages
  
• Six Sigma quality programmes
  
• Workforce development, 4-5 training centres with 5,000 trainees each
  

This is moving from “let’s attract Apple to assemble iPhones here” to “let’s build the entire supply chain so that assembling here actually makes strategic sense.” The localisation targets tell the story: 50% of PCB demand to be met domestically, 61% of Li-ion battery demand, and 100% of relay demand with surplus for exports.

What This Means for Investors

I have been tracking the Indian electronics manufacturing space for a while now. The opportunity here is real, but you need to understand where the value creation will happen.

The companies getting ECMS approvals, Dixon, Syrma, Ratnaveer, Kaynes (from earlier rounds), are building capacity that will take 2-3 years to come on stream. The revenue and margin impact will not show up in the next quarter’s results. This is a 3-5 year story.

But consider the tailwinds. India’s electronics production target is $500 billion by FY2031, up from $125 billion in FY2025. That is a four-fold jump in six years. Even if we hit 60-70% of that target, the component makers who are investing today will be the biggest beneficiaries.

The question I keep asking myself is, can we actually execute? The PLI scheme for mobiles proved we can. Smartphone import dependence dropped from 78% in 2014-15 to practically zero today. India overtook China to become the top smartphone exporter to the US in the September 2025 quarter.

If we did it for phones, we can do it for components.

The Bottom Line

ECMS is building India’s component backbone, from PCBs and passives to rare earth magnets and capital equipment. It is the kind of supply chain deepening work that does not make front-page news but determines whether India’s electronics story has substance or is just a relabelling exercise.

For investors, the listed companies in this space, Dixon Technologies, Syrma SGS, Kaynes Technology, deserve a place on your watchlist. The capex is happening now. The revenue will follow.

Keep your eyes on execution.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)