Mint Explainer | India’s electronics ambition: Can the ECMS help it challenge global manufacturing giants?

However, the tough act starts now to make India globally competitive in electronics component manufacturing, an area where it has limited expertise and lacks the global-scale factories to rival those of countries such as China, Vietnam, Malaysia, and Taiwan.

Mint examines whether this scheme can be a game-changer.

What is the scheme?

India relies heavily on imported electronic components, such as multi-layer printed circuit boards, TV display modules, camera modules, sensors, connectors, and relays, resulting in the assembly of finished electronic products rather than the ground-up manufacturing of these components.

The ECMS is a targeted push to localize the production of electronic components critical to reducing import dependency and building a robust domestic supply chain.

The Union cabinet approved the scheme early this year with a fiscal outlay of ₹22,919 crore. It has received 249 applications with an anticipated investment commitment of ₹1.15 trillion. The response is nearly double the targeted investment of ₹59,350 crore. The estimated production of electronics components under the scheme over the next six years is expected to be worth approximately ₹10 trillion. That is almost 2.2 times the targeted ₹4.5 trillion worth of production under the scheme.

Can it position India as a global hub for electronics manufacturing?

India’s ambition to become a global electronics manufacturing hub hinges on whether it can move beyond assembly to full-stack manufacturing.

Component manufacturing is part of a larger ecosystem development, which also includes making semiconductors in India. This scheme focuses on non-semiconductor electronic components. The scheme is a step towards making India self-reliant in components. But global competitiveness requires scale, speed, and ecosystem depth. The 249 proposals received include domestic and global components manufacturers.

However, without parallel investments in logistics, research and development, and skilled labour, it risks becoming a domestic capacity-building exercise. For instance, India lacks a skilled labour force for electronics component manufacturing. This is expected to change as factories begin to operate here. Besides, India is working towards bringing logistics costs to global benchmarks of around 8% of gross domestic product. The real test lies in whether India can integrate into global value chains—not just serve its own market.

What are the key implementation challenges?

Execution remains India’s Achilles’ heel. Land acquisition delays, fragmented logistics, and unreliable power infrastructure could slow down rollout. Skilled labour is another bottleneck—electronics manufacturing demands precision, and vocational training hasn’t kept pace with the industry’s needs.

Regulatory clarity across states, fast customs clearances across ports and coordination between ministries will be crucial. Without a single-window clearance mechanism and time-bound approvals, investor enthusiasm may wane. The scheme’s success depends not just on incentives, but on whether India can deliver predictable, frictionless operations at scale.

What about the supplier ecosystem?

India’s electronics sector is still in its infancy compared to Asian giants such as China, Vietnam, Malaysia, and Taiwan. These countries offer dense supplier networks, just-in-time logistics and decades of manufacturing know-how.

India’s fragmented ecosystem results in longer lead times, higher costs, and limited agility. However, what India has is a growing domestic market for electronics and is working towards not only being self-reliant but also targeting exports.

For instance, according to the ministry of electronics and IT, India had just two mobile manufacturing units in 2014, and now it has over 300 factories. India has a target of $300 billion in electronics production by 2026. It also sees itself contributing 4-5% to the global electronics exports market by 2030.

India has an opportunity to catch up and even overtake some of its rival Asian manufacturers. However, this can only happen if the entire ecosystem, comprising the availability of skilled labour, high-tech manufacturing, logistics, and semiconductor availability, comes together to make manufacturers globally competitive.

How many jobs will the scheme create?

The ECMS is projected to create 142,000 direct jobs, more than the target of 91,600, and a substantial number of indirect jobs, demonstrating its potential to drive significant employment growth. Direct jobs will be in factories, while indirect jobs will be in areas such as real estate development, logistics, maintenance, and services.

But electronics manufacturing demands skilled technicians, not just regular labour—technicians who are familiar with the use of various industrial gases and are well-versed in precision manufacturing processes that involve the complexity of component creation. For instance, a smartphone may have 500 parts, and each electronic component, such as a camera, will have its own sub-components. A robust skilling roadmap is needed to create talent ready for work in hi-tech factories.

How does it align with India’s broader geopolitical and trade strategy? And can it help India leapfrog?

The scheme is a strategic pivot in the country’s manufacturing playbook, aiming to localize critical parts of the electronics supply chain and reduce dependence on imports. It aligns with India’s broader trade and geopolitical goals by offering tailored incentives to global and local firms seeking diversification. While countries such as Taiwan and South Korea have a decades-long head start, India is betting on policy synergy, rising domestic demand, and greenfield advantages to leapfrog. Success in smartphone manufacturing demonstrates that it can scale its manufacturing capabilities, and the ECMS builds on that momentum.

India may not replicate the model that other Asian countries adopted decades ago, but it can carve out leadership in niche segments, such as automotive electronics or telecom sub-assemblies.

Is India building just factories or a full-stack innovation ecosystem?

The focus of the scheme is to build the components ecosystem. Components will be designed to meet the requirements of end-product manufacturers of multiple brands, including Samsung, LG, Apple, Google, Bosch, Daikin, and others. The challenge will be to integrate into the supply chains of global end-product manufacturers.

But that’s only a start to becoming self-reliant. Eventually, Indian companies will need to develop their own brands, create intellectual property (IP), and manufacture finished electronic products. For example, around 20% of the global chip design talent is in India, but India has just started making chips. In parallel with building the electronics, local companies must focus on innovation to own and create products. Otherwise, it will only be a manufacturing outpost, part of global supply chains rather than the owner of electronic brands and products.

What mechanisms are in place to ensure capital deployment and prevent speculative applications?

The basic idea of the scheme is to deepen the value chain of electronics manufacturing and ensure that overall, the domestic value addition is substantially increased. Thereafter, integration with the global value chains will be the focus area.

While the scheme has attracted 249 applications for making everything from printed circuit boards (PCBs), electro-mechanical components, lithium-ion cells, camera modules, etc., the government will disburse funds in a ‘first-come, first-served’ way.

Approved companies that can grow their businesses and bring products to market faster will receive incentive payouts. Scrutiny of the proposals has started for these applicants, and the ministry of electronics and IT is expected to fast-track the approval process.