The India opportunity

Developing resilient electronics supply chains


of India’s domestic electronics manufacturing landscape comprise 4 key electronics segments – mobile phones, consumer electronics, IT hardware, and electronic components


CAGR surge in India’s mobile phone production between 2015 to 2022. Mobile phone production has grown from 60 million to 310 million units


of all critical minerals identified by Ministry of Mines has almost complete import dependence for India


incentives for ESDM & semiconductor manufacturing . Current Centre and state incentives range between 20–25%


Recent geopolitical realignments have created a state of uncertainty in the global economy. Supply chain disruptions, which began with the COVID-19 pandemic and followed by geopolitical conflicts are threatening global economic security. This has highlighted the vulnerability of the global economy due to overreliance on a small number of countries for the supply of critical raw materials, components and products across sectors.

Amidst this backdrop of global uncertainty, India's Electronics System Design and Manufacturing (ESDM) sector has emerged as a strategic and high-growth industry, mobile phone production alone witnessing a remarkable surge from 60 million to 310 million units between 2015 and 2022. India's competitive advantages, including competitive wages, a skilled workforce, and favorable geopolitical positioning, have positioned it as an attractive destination for manufacturing investments. India must adopt a multi-faceted approach encompassing strategic collaborations, resource security measures, IP protection mechanisms, and decisive policy interventions.

Moreover, the significant dependence of a wide range of industries on these materials in the absence of domestic production further emphasises the need for reliable sourcing. Therefore, India will have to invest in infrastructure and policy solutions from the start to finish to ensure that it is not caught off guard when geopolitics inevitably intervenes in geoeconomics.

Key Highlights

India's ability to produce for the global market has been showcased primarily in four key electronics sectors – mobile phones, consumer electronics, IT hardware, and electronic components – comprising more than 70% of India's domestic manufacturing landscape.
India’s development of its smartphone production systems has been a good case-study to witness how nations can catalyse manufacturing system through clear policy objectives as from 2015 to 2022, mobile phone production has surged from 60 million to 310 million at an impressive CAGR of 26%.
India also has the potential to move past the US to become the world’s second largest economy by 2040, contributing 15% to the global GDP.
Given the capital-intensive nature of electronics manufacturing, the current Government schemes provide incentives to the tune of 20–25% on capital expenditure to electronics manufacturing, including smartphone manufacturing and its ancillary industries.

Key findings

Competitive wages, highly skilled human resources and geopolitical nudges are pushing companies to explore India as the ‘next’ manufacturing destination, especially for ESDM. Strategic collaboration between India and other countries can facilitate the relocation of sub-component value chains to India, enabling local firms to develop niche advantages and achieve greater self-reliance in the production of electronics by consolidating value chains and leveraging the four most critical levers of the production system – technology, talent, trunk infrastructure and trade.

Securing critical mineral resources to achieve India’s ambition of value chain localisation in electronics is also an important aspect of the electronics system design and manufacturing (ESDM) sector. India needs to focus on leveraging its substantial reserves of some minerals as a means to access the resources the country lacks. For minerals where India faces a severe scarcity and high external dependence, it needs to ensure that it relies on friendly countries with low political risk to fulfil its commodity needs.

A multi-pronged approach is essential to ensure that the centre of the ESDM sector in India holds firm. The next decade will be crucial for this given the window of opportunity for India to be a part of the value chain, created by the geopolitical context, is very small.

The creation of new jobs for a growing population and bridging the pay gap in manufacturing will also create demand-side stability for the economy, in general, and the ESDM sector in particular.

It is necessary to invest in jobs for the future. Even as redundancies in technology emerge, policy decisions should ensure that current and future workers in the sector are constantly trained, and their skills upgraded.

Skilled human resources are a competitive factor cost for India and will continue to be so for the foreseeable future. Investing in the country’s demographic dividend also has socio-economic benefits as it expands the consumer base.

Way forward

On-shoring, near-shoring, and friend-shoring have become central to policy discussions around the quest for value chains security. India has been moving towards on-shoring and friend-shoring ESDM supply chains not only due to the sector’s criticality for economic growth, but also the potential it presents for employment.

Given India’s vulnerability in terms of access and control, the need of the hour is strategic international partnerships to secure its mineral needs.

In addition to building their own capabilities and ongoing enabling interventions, India would also need to invest in its partners. Geopolitical risks and external shocks will continue to play a role in trade policy regardless of internal efforts. India must carefully choose its partners, at least for the next ten years. These will be partners that are dependable and will grow together and therefore build better bonds in the region for a cohesive development journey.

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Contact us

Mohammad Athar

Mohammad Athar

Partner and Leader Capital Projects and Infrastructure & Industrial Development and Investments Promotion, PwC India

Sujay Shetty

Sujay Shetty

Director and Leader (ESDM) Capital Projects and Infrastructure, PwC India