Need higher value-addition in electronics export, says Niti Aayog

India’s electronics exports grew at a compound annual growth rate (CAGR) of 17.2% between 2015 and 2024, far outpacing global electronics trade growth of 4.4%. The sector’s shipments rose from $8.6 billion in 2015 to $42 billion in 2024, and now account for 10% of India’s total export basket.

The government’s apex think tank said the electronics industry is also now a significant pillar of domestic manufacturing. Production rose nearly six-fold over the past decade—from ₹1.9 lakh crore in FY15 to ₹11.3 lakh crore in FY25, contributing 3.4% to India’s GDP and generating nearly 25 lakh jobs, said the report released by Niti Aayog vice-chairman Suman Bery.

However, the gains remain concentrated in mobile phones and telecom equipment, which account for over 52% of India’s electronics export basket, reflecting the dominance of assembly-led manufacturing, the report said.

While India has built competitiveness in mobile phone exports—achieving a 3.5% share in the segment’s global demand—it remains heavily import-dependent in high-value components such as integrated circuits, semiconductors, batteries and display panels, it said.

Flagging the need for growth in the crucial integrated circuits, the report said the segment accounts for 26.2% of the global electronics demand, yet India’s export share remains just 0.02%, even as it imported $23.8 billion worth of chips in 2024, underlining structural gaps in domestic capabilities.

The report cautioned that global demand growth is increasingly concentrated in core components and enabling technologies, rather than finished products, creating a mismatch with India’s current export structure.

India’s total electronics exports were at $42.1 billion in 2024, while imports reached $100.6 billion, resulting in a trade deficit of $58.5 billion in the segment.

Global electronics trade remains heavily concentrated in East Asia, where China, Taiwan, South Korea and Vietnam are deeply integrated into component-intensive production networks. In contrast, India is positioned largely as a final-assembly hub, exporting finished electronics mainly to consumption markets such as the US and the UAE rather than participating in dense intra-Asian processing trade.

To address this imbalance, the report calls for a transition from assembly-driven expansion to component-led manufacturing, supported by sustained research and development, anchor investments, customs rationalization, logistics reforms and predictable domestic procurement policies. It also highlights the need to reduce structural cost disadvantages and strengthen export financing.

Broader trends

Beyond electronics, the report said India’s overall merchandise and services exports rose about 8.5% year-on-year in Q2 FY26, compared with imports’ growth of around 4.5%.

The country’s merchandise exports were at $108 billion in Q2, up 8.4% year-on-year, while imports rose 5% to $196 billion. Services exports rose 8.7% to $102 billion, with services imports rising 3.8% to $51 billion. India recorded a services surplus of $50.9 billion during the quarter, although the overall goods and services trade balance remained in deficit at $37 billion.

The report also underlined the rising importance of cross-border e-commerce, projecting that digital exports could scale significantly by 2030 with policy support, offering opportunities for MSMEs and electronics-driven online trade.

As per the report, trade gained momentum in the second quarter of FY26, driven by a 33.4% surge in electrical machinery exports. On the import side, fertilizer shipments surged 239% from a year ago.

Trade destinations remained largely stable during the quarter. Exports to major markets grew strongly, led by Hong Kong, China and the US, while imports from the United Arab Emirates rose 48%.

The report also highlighted a broader global trend, noting that South–South trade has outpaced South–North trade. Exports among the developing economies rose from about $1.8 trillion in 2005 to $7.3 trillion in 2024, surpassing their exports to the developed economies.

Now, for more value

“The rapid rise in electronics exports shows that India’s manufacturing ecosystem is gaining depth, particularly in mobile devices. However, the next phase of growth must come from strengthening domestic component manufacturing and reducing dependence on imported semiconductors and high-value parts,” said R.K. Bhatnagar, director general, Voice of Indian Commtech Enterprises (VOICE) that represents Indian communications and technology firms.

“If India wants to sustain export momentum and improve trade balance in electronics, it needs consistent policy support, competitive financing and stronger integration into global supply chains,” he added.

Industry players are looking to rise to the opportunity. “We view this as a structural inflection point for the industry. We are aligning our roadmap toward higher value-addition, advanced manufacturing capabilities, and global market integration, with a clear ambition to scale our revenues 3x to 4x over the coming years as India moves up the electronics value chain,” said Mukesh Vasani, chairman & managing director, Aimtron Electronics, an electronics system design and manufacturing (ESDM) company.