India’s electronics sector has long leaned heavily on China for key components such as circuit boards, camera modules and display laminates – but new policy initiatives now signal a concerted effort to shift that balance. The country is moving beyond simply assembling finished devices and is making deep structural changes in its manufacturing ecosystem to reduce dependence on China, diversify supply chains, and capture greater domestic value-addition. The how and why of this transition offer a window into India’s evolving industrial strategy in an era of global tech fragmentation.

How India’s dependence on China took root

Over the past decade India has become a major destination for global smartphone assembly, consumer-electronics production and electronics exports, yet its component manufacturing base remains under‐developed. Imports of electronic components into India topped US$ 30 billion in recent years, with nearly 40 percent of that sourced from China and another 15-20 percent from Hong Kong alone. The result: while India builds finished goods, the foundational elements continue to flow in from abroad. Local value-addition remains low – industry observers estimate that on many consumer-electronics lines Indian manufacturing contributes only 15-25 percent of the device value, compared to China’s domestic input share of around 40 percent. Thus the component gap has created both strategic weakness and trade exposure.

China’s dominance in components has been reinforced by its scale, integrated supply chains, and low-cost manufacturing ecosystem. As India scaled device assembly, it remained reliant on imports of components such as printed-circuit-boards (PCBs), camera modules, cover-glass laminates and other sensitive sub-assemblies. These inputs are critical not only for mobile phones but also for wearables, medical electronics and aerospace modules. That dependency leaves India exposed to external shocks, supply-chain disruptions, export-controls or geopolitical decoupling. Recognising that exposure, Indian policymakers have shifted focus from device assembly to building the upstream ecosystem.

Why the shift away from China is accelerating

Several factors now drive India’s accelerated push to reduce component import reliance. First, global tech companies are diversifying manufacturing destinations. As brands such as Apple expand production in India and relocate certain supply-chain functions out of China, India’s manufacturing elasticities are being tested – yet the absence of a robust component base weakens that relocation logic. Second, China has itself imposed stricter export controls and investment restrictions in recent years, reinforcing the argument for supply-chain branching. Third, India’s own export ambitions – targeting a domestic electronics market of US$ 500 billion and components market of US$ 150 billion by 2030 – demand that more of the value‐chain remain local. Without a component ecosystem, India risks perpetuating a low-value assembly model.

Moreover, policymakers view component sovereignty through the lens of national security and industrial resilience. In sectors like defence electronics, telecommunications or advanced manufacturing, dependence on foreign-made modules threatens both strategic autonomy and technological upgrading. Thus the component-manufacturing drive is embedded in the broader “Atmanirbhar Bharat” (self-reliant India) narrative: build domestic capability, link into global supply chains, and reduce external vulnerabilities.

How India is building its domestic component ecosystem

The Indian government has introduced several key schemes aimed at rebalancing component manufacturing. One flagship initiative is the Electronics Component Manufacturing Scheme (ECMS) launched in 2025, which offers differentiated fiscal incentives – capital-expenditure-linked, turnover-linked and hybrid support – for firms setting up domestic production of multi-layer/high-density PCBs, camera-modules, laminates and other high-value components. The first tranche of approved projects totals more than ₹55 billion (≈US$ 625 million) for seven plants across Tamil Nadu, Andhra Pradesh and Madhya Pradesh. These projects are expected to generate exports, domestic output and more than 5,000 direct jobs, while reducing imports by roughly ₹18,000-20,000 crore annually according to senior officials.

In parallel, India is steering contract-manufacturing players away from China-dominance. Local component manufacturers are now forming partnerships with South-Korea and Taiwan firms rather than Chinese suppliers, reflecting a deliberate repositioning of supply-chain alignments. At the same time, the government’s larger chip-and-semiconductor push – including the India Semiconductor Mission – seeks to establish a long-term base for critical upstream components and design-led exports.

On the ground, global device assemblers in India are now increasingly sourcing locally produced modules. For example, major smartphone exports from India rose significantly, and India recently overtook China as the top smartphone-exporting nation to the U.S. Yet device exports alone will not secure a stronger manufacturing foothold unless component imports decline and local value-addition rises. To that end, industry targets aim to elevate domestic component value-capture from current levels to 35-40 percent of device cost – aligning more closely with what China has achieved.

Risks and strategic implications of the transition

India’s ambitions to reduce component imports and rebuild its electronics ecosystem face several challenges. Building high-precision component manufacturing requires scale, technology know-how, talented labour, stable policy and large upfront investment – areas in which China still enjoys an edge. While incentives are generous, India must attract global firms to set up component plants, integrate them with global supply chains and ensure competitiveness on cost and quality. Experts note that bureaucratic delays, land-acquisition issues, infrastructural bottlenecks and peripheral costs have so far hindered India’s ability to serve as a full China-substitute in manufacturing.

Another risk stems from demand and commodity uncertainty. If global demand for consumer-electronics weakens or if component prices fall due to oversupply, newly established domestic plants may struggle with utilisation and returns. Moreover, shifting away from Chinese components does not mean abandoning China altogether: many global companies still rely on Chinese manufacturing, and India must carve out its niche while managing bilateral trade and geopolitics.

Yet the strategic implications are profound. If successful, India could evolve from a device-assembly hub to a genuine electronics-manufacturing platform, capturing more value, boosting exports, creating higher-skilled jobs and strengthening industrial sovereignty. It would also reposition India in the geopolitics of tech supply chains: instead of being the downstream link of China’s manufacturing engine, India could emerge as an independent node with diversified sourcing and manufacture. For global electronics firms, the shift offers another viable base outside China — one that matches large domestic demand, export potential and increasingly supportive policy frameworks.

In essence, India’s push to reduce dependence on Chinese-made electronic components is more than a policy makeover—it is a strategic reset. The country is striving not only to assemble more electronics, but to build the ecosystem behind them: the printed-circuit boards, camera modules, packaging, laminates and sub-assemblies that make devices work. If the transition succeeds, the implications will ripple through global manufacturing, trade flows and India’s industrial trajectory.

(Adapted from CNBC.com)

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