Why is India becoming a strategic electronics manufacturing base for European companies?
India offers European electronics firms scale, policy incentives, export access, and supply-chain diversification beyond China in a single manufacturing base.
Over the past decade, India’s electronics manufacturing sector has shifted from import dependence to global relevance. What was once a consumption-driven market is now evolving into a production and export hub of strategic importance. For European companies seeking to diversify supply chains, reduce China concentration risk, and build resilience, India is no longer a peripheral option. It is emerging as a core manufacturing destination embedded in global value chains.
Today, India’s electronics production stands at approximately USD 135 billion and is firmly on track to reach USD 300 billion by 2026, positioning the country as a long-term manufacturing pillar rather than a low-cost alternative.
Pawan Bhatnagar, Managing Director, Kasvu Consulting analyses India’s Electronics Manufacturing Opportunities for Europe.
Why is electronics manufacturing in India growing so rapidly?
India’s electronics growth is driven by rising domestic demand, export momentum, and long-term government incentives rather than short-term cycles.
India’s electronics output has expanded nearly six-fold over the last decade, reflecting a structural transformation rather than a cyclical boom.
Key growth drivers include:
- Rapid urbanisation and digital adoption
- A growing middle class driving domestic electronics demand
- Clear national manufacturing priorities under Make in India and Atmanirbhar Bharat
On the export side, electronics exports have increased eight-fold to USD 39 billion, with projections reaching USD 120 billion by March 2026. This export push is central to India’s ambition to integrate deeply into global electronics supply chains.
The National Policy on Electronics (NPE) 2019 underpins this trajectory, laying out a roadmap to build a USD 300 billion electronics ecosystem through incentives, infrastructure, and regulatory simplification.
What policy incentives make India attractive for foreign electronics manufacturers?
India offers foreign electronics manufacturers PLI-linked cash incentives, full FDI access, tax benefits, and simplified approvals at national and state levels.
India’s electronics manufacturing growth is reinforced by one of the most comprehensive incentive frameworks globally.
Key national schemes include:
- Production-Linked Incentive (PLI):
4–6% incentives on incremental sales, with over USD 9 billion allocated across 15 electronics segments including mobiles, IT hardware, telecom, and components. - Electronics Components Manufacturing Scheme (ECMS):
Approximately USD 860 million approved to support component assembly, testing, and manufacturing, with significant job creation impact.
In addition, foreign manufacturers benefit from:
- 100% FDI under the automatic route
- Tax holidays in Special Economic Zones (SEZs)
- Duty exemptions on capital goods
- Faster approvals and simplified compliance processes
These measures have already translated into results. Global players such as Foxconn and Pegatron have scaled operations in India, while local value addition has increased to 20–25%, with further upside as the component ecosystem matures.
How does India’s electronics infrastructure support large-scale manufacturing?
India supports electronics manufacturing through 55+ dedicated clusters offering plug-and-play facilities, skilled talent, and strong port connectivity.
Policy reforms are reinforced by purpose-built industrial infrastructure designed for speed, scale, and localisation.
India currently hosts over 55 Electronics Manufacturing Clusters (EMCs) spread across more than 10,000 acres. Key hubs include:
- Noida (Uttar Pradesh): Mobile manufacturing and emerging semiconductor activity
- Hyderabad – Fab City: Integrated circuits and advanced electronics
- Bengaluru – Electronics City: R&D, design, PCBs, and embedded systems
Newer hubs in Maharashtra and Gujarat are also gaining traction, offering strong logistics connectivity, access to skilled engineering talent, and proximity to ports—factors particularly relevant for export-oriented European manufacturers.
Which electronics segments offer the biggest opportunities in India?
The strongest electronics opportunities in India are components, EV electronics, telecom equipment, energy storage, and advanced industrial electronics. India is actively encouraging foreign participation in high-growth segments that remain under penetrated and strategically important.
Key opportunity areas include:
- Electronic components and sub-assemblies such as PCBs, connectors, and sensors
- EV electronics including power electronics, battery management systems, and chargers
- Telecom and 5G equipment
- Displays, wearables, and LED lighting
- Energy storage systems and advanced batteries
For European companies, India combines manufacturing scale, competitive costs, deep engineering talent, and stable policy frameworks, while also enabling diversification away from single-country risk.
How does India compare with China and Vietnam for electronics manufacturing?
China offers scale, Vietnam offers speed, but India uniquely combines scale, incentives, domestic demand, and long-term export resilience for electronics manufacturing.
As global electronics supply chains rebalance, European companies increasingly evaluate China, Vietnam, and India as parallel or alternative manufacturing bases. Each market offers distinct advantages.
Electronics Manufacturing Comparison Snapshot
| Factor | China | Vietnam | India |
| Manufacturing Scale | Very High | Medium | High and expanding |
| Cost Competitiveness | Rising | Competitive | Competitive with incentives |
| Policy Incentives | Limited, mature | Selective | Extensive and expanding |
| Domestic Market Size | Large | Small | Very large |
| Export Orientation | Strong | Strong | Rapidly strengthening |
| Supply Chain Depth | Deep | Moderate | Growing fast |
| Geopolitical Risk | Increasing | Moderate | Relatively stable |
How should European companies approach electronics manufacturing in India?
European firms should enter India via component-led strategies, early incentive planning, local partnerships, and export-oriented manufacturing models.
While the opportunity is significant, success in India depends on execution discipline and strategic entry planning.
Kasvu Consulting recommends the following approach:
- Adopt a component-first strategy
Localisation depth, margins, and long-term control are strongest in components and sub-systems. - Design India as an export base
Manufacturing should serve Southeast Asia, the Middle East, and Africa—not only domestic demand. - Plan incentives at the feasibility stage
Schemes such as PLI, ECMS, and state incentives materially improve project economics when structured early. - Leverage local partnerships
Joint ventures, contract manufacturing, and strategic alliances reduce execution risk and accelerate time-to-market. - Choose locations strategically
The optimal site balances incentives with supply chains, talent availability, logistics, and ecosystem maturity.
Kasvu Consulting works closely with European and global electronics companies to design India market entry strategies, identify partners, structure investments, and support on-the-ground execution.
For companies building resilient, future-ready electronics supply chains, India is no longer a side option—it is a strategic necessity.