·PIB·15 marks·250–350 words

India's electronics manufacturing push has focused mainly on assembly rather than deep component manufacturing. Critically evaluate government efforts, including ECMS, to correct this imbalance.

In this answer
  1. The imbalance
  2. Merits of current efforts
  3. Critical limitations

Components accounted for about 42% of global electronics production value in 2022, but only 9% in India in 2023-24 [1] — proof that India's rise has been assembly-led. The Electronics Component Manufacturing Scheme (ECMS) is a genuine corrective, but incentives alone cannot close structural cost gaps.

The imbalance

  • Domestic value addition in electronics remains only 18%-20% [4].
  • In 2024 India was a net importer of chips (USD 23.5 bn), display panels (USD 4.3 bn) and batteries (USD 2.7 bn) [1].

Merits of current efforts

  • ECMS (notified 8 April 2025, MeitY) targets bare components and sub-assemblies — PCBs, capacitors, connectors, Li-ion cells, camera and display modules — not finished goods [2][3].
  • It adds capex-linked and hybrid incentives with an optional one-year gestation, correcting SPECS's turnover-only design that ignored components' long payback [1][3].
  • Industry response justified raising the outlay from ₹22,919 crore to ₹40,000 crore; 46 proposals worth ₹54,567 crore are approved, with ~51,000 direct jobs projected [2].
  • Unlike SPECS, ECMS has captive demand: smartphone exports grew from USD 7 bn (2022) to USD 20 bn (2024) [1].

Critical limitations

  • Approvals are commitments, not outcomes — ECMS spending was only ₹7 crore (RE 2025-26) and ₹1,500 crore (BE 2026-27) against ₹40,000 crore [1].
  • Precedents warn: PLI for IT hardware met ~20% of its investment and 3% of its production target (5,132 jobs against 75,000); SPECS drew ₹9,482 crore against ₹20,000 crore expected [1].
  • NITI Aayog finds a 14%-18% cost disadvantage versus China — finance up to 4%, logistics 2%-3% — which an output subsidy does not touch [1].
  • An inverted duty structure persists (machinery at zero duty, critical parts at 5%-25%), alongside weak cluster infrastructure and skill shortages [1].

ECMS rightly moves incentives down the value chain from assembly to components; its success now depends on execution. Pairing it with duty rationalisation, interest subvention, functional Electronics Manufacturing Clusters and a strengthened National Single Window System [1] can convert commitments into capacity, advancing Atmanirbhar Bharat and SDG-9 on resilient industry.

Sources

  1. 1Demand for Grants 2026-27 Analysis: Electronics and Information Technology, PRS Legislative Researchcomponent share, net imports, ECMS budget lines, PLI/SPECS shortfalls, NITI Aayog cost gap, inverted duty, single-window and skills gaps
  2. 2Government approves 22 proposals under the 3rd tranche of ECMS, PIBtarget products, cumulative approvals, investment and employment figures
  3. 3Electronics Components Manufacturing Scheme — PIB backgroundernotification date, outlay, tenure and gestation period
  4. 4Domestic value addition in electronics manufacturing currently at 18%-20%, PIBdomestic value addition figure

More from this note