India's first Production-Linked Incentive (PLI) scheme, announced in March 2020, helped transform the country into one of the world's largest electronics manufacturing hubs. Today, 99.2% of mobile phones sold in India are manufactured domestically, and the share of electronics in India's merchandise exports has jumped from 1.7% in FY15 to 11% in FY26.

But only about 24% of the value of an electronic product is currently created within India. The government wants to increase this to 40-45% by encouraging companies to manufacture more components locally instead of just importing and assembling them.

On July 15, the Union Cabinet approved incentives worth nearly Rs 1.9 lakh crore to boost India's semiconductor and electronics manufacturing ecosystem. The package includes Rs 1.3 lakh crore for semiconductors (Semicon 2.0) and Rs 62,500 crore for electronics and mobile phone manufacturing (MPMS).

Unlike the earlier PLI scheme, which encouraged companies to manufacture finished products, the new incentives target the parts that go inside them. The scheme covers semiconductor fabrication, chip packaging (OSAT), printed circuit boards (PCBs), electronic components, manufacturing equipment, research and development, among other areas.

Navkendar Singh, Associate Vice President at IDC, said, "The new scheme marks a shift from assembling more electronics to building deeper manufacturing capabilities through R&D and local value addition."

The government is yet to name any direct beneficiaries. Even so, several electronics manufacturing companies have already begun moving towards backward integration. They’re investing in many of the areas the new scheme is designed to support, from camera modules and displays to PCBs and semiconductor packaging.

In this edition of Chart of the Week, we look at how companies are climbing the electronics value chain by manufacturing more of the components that go into finished products.

From assembly lines to high-value components

Smartphone manufacturing is shifting from just assembly to making more advanced components, which typically carry higher margins. “A small device like a phone requires the industry to pack the power of a data centre into a single device. That requires precision. This industry also drives several other industries,” IT minister Ashwini Vaishnaw said.

Dixon Tech is ramping up production of camera modules and display screens. The company is expanding its camera module capacity by 2.6x, aiming to produce 190 million units over the next 15-18 months. Revenue from this vertical is expected to more than double to Rs 2,500 crore.

It has also entered the mobile display business and is targeting a capacity of up to 55 million units over the next two years. Forecaster expects the company to spend about Rs 1,109 crore on capital expenditure in FY27.

Discussing the company's display expansion, Vice Chair & MD Atul Lall said, "Once we start achieving 80-90% of capacity utilization, the revenue generation is going to be Rs 5,500-6,000 crores with a double-digit margin." He added that the camera and display businesses are expected to improve operating margins by 40-50 basis points as they scale.

Amber Enterprises is aiming to capture 20% of Oppo's smartphone manufacturing volume in India, with a target of producing 15 million smartphones annually by FY29. By taking over Oppo's sub-leased manufacturing facility and leveraging government incentives, the company plans to increase the domestic value added in these phones from the current 10-12% to 35-40% over the next six years. 

The company also plans to invest over Rs 4,500 crore in electronics component projects that have been approved for incentives under the Electronics Components Manufacturing Scheme. Executive Chairman, CEO & Whole-time Director Jasbir Singh said, “The electronics division is expected to grow around 40% in FY27,” after segment revenue jumped 49% in FY26.

The government is also trying to reduce manufacturing costs beyond direct subsidies. It waived import duties on 85 capital goods used in lithium-ion cell manufacturing, along with key inputs used for display assemblies and wireless charging modules.

Building India's chip backbone

Printed circuit boards (PCBs) form the backbone of almost every electronic device, connecting components so they can function together. India currently imports Rs 80,000 crore worth of PCBs every year, with domestic manufacturers meeting only about 10% of local demand.

Syrma SGS formed a joint venture with South Korea's Shinhyup Electronics to address this domestic supply gap. It is investing Rs 1,600 crore to build a PCB manufacturing facility, with production expected to begin by March 2027. Syrma's MD J.S. Gujral said the company expects to recover around 50-60% of the investment through government subsidies over time.

Chip packaging (OSAT) prepares semiconductor chips so they can be integrated into electronic devices. CG Power is investing about Rs 7,584 crore in its semiconductor packaging project, expecting to increase packaging capacity from 0.5 million chips a day to roughly 15 million chips per day by the end of 2026. The company is also eligible for Rs 4,900 crore in combined state and central government incentives, covering roughly 65% of the capex.

Kaynes Tech is moving beyond manufacturing products based on customer designs by developing its own intellectual property. The company has expanded into original design manufacturing (ODM), product engineering and IoT solutions. Revenue from these businesses increased from 18% of total revenue in FY25 to 28% in FY26. New product development and other value-added solutions are expected to contribute about 30% of revenue over the coming years. Executive Vice Chair Ramesh Kunhikannan said the company's semiconductor packaging business already has revenue visibility of over Rs 2,500 crore over the next five years.

As companies invest in chip packaging, product design and other parts of the electronics value chain, India's electronics industry is moving into more advanced component manufacturing. If these investments scale as planned, the country could capture a larger share of the value created across the supply chain rather than remaining primarily an assembly hub.