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Domestic value addition in electronics manufacturing has improved significantly over the years; currently at 18%-20%

April 01, 2026 4 min read Economics Science & Technology GS3 (Indian Economy Industrial Policy Infrastructure)
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What Happened

  • According to official data, India's domestic value addition (DVA) in electronics manufacturing has improved significantly over the years and currently stands at 18–20%, up from lower levels at the time the Production Linked Incentive (PLI) scheme was launched.
  • The government's electronics manufacturing strategy is guided by the AtmaNirbhar Bharat vision and targets developing the complete value chain — from finished products down to components, sub-components, and semiconductor chips.
  • Despite progress, the DVA of 18–20% falls significantly short of the government's original PLI-era target of 35–40% domestic value addition in smartphones by FY26 — reflecting the structural challenge of building a component ecosystem without access to Chinese supply chains (due to Press Note 3 restrictions).
  • The government has responded with the Electronics Component Manufacturing Scheme (ECMS), with a ₹40,000 crore allocation over 6 years to attract component manufacturers.

Static Topic Bridges

Production Linked Incentive (PLI) Scheme for Electronics

The PLI Scheme for Large Scale Electronics Manufacturing was one of the first PLI schemes notified by the Government of India, in April 2020. It provides incentives of 4–6% on incremental sales of mobile phones and specified electronic components manufactured in India over a 5-year period. The scheme targeted attracting large global electronics manufacturers (Apple/Foxconn, Samsung, Wistron) and domestic champions (Lava, Micromax, Dixon Technologies). By FY25, India had become the world's second-largest mobile phone manufacturer by volume, with production exceeding ₹4.1 lakh crore. However, most of this production involved final assembly with heavily imported components — limiting DVA. The new PLI 2.0 under discussion is expected to explicitly link incentives to DVA targets, incentivising deeper component localisation.

  • PLI for Electronics: notified April 2020; incentive of 4–6% on incremental sales
  • Mobile phone production: exceeded ₹4.1 lakh crore by FY25
  • India: world's 2nd largest mobile phone manufacturer by volume
  • DVA at launch: ~15–18%; current: 18–20%; original target: 35–40% by FY26
  • PLI 2.0: under discussion; incentives to be linked to DVA performance
  • Press Note 3 (2020): requires government approval for FDI from China — restricted Chinese component suppliers from entering India

Connection to this news: The 18–20% DVA figure represents the current ceiling of PLI-driven progress; breaching it requires moving beyond assembly into component manufacturing — which is the explicit mandate of ECMS and Semicon India.

Electronics Component Manufacturing Scheme (ECMS) and SPECS

India's electronics manufacturing gap is primarily at the component layer — PCBs, camera modules, display panels, connectors, and semiconductor sub-assemblies that are almost entirely imported (predominantly from China). Two government schemes address this: (1) SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors), notified April 2020, provides 25% incentive on capital expenditure for downstream components; (2) ECMS (Electronics Components Manufacturing Scheme), approved in 2025, is a six-year ₹40,000 crore programme targeting camera modules, mechanical parts, battery enclosures, wiring harnesses, display assemblies, and sub-components for electric vehicles and wearables. Together, ECMS and SPECS are designed to attract both domestic and foreign component manufacturers to India, building a supply chain that reduces import dependence.

  • SPECS: 25% capex incentive; covers PCBs, camera modules, optical transceivers, connectors
  • ECMS: ₹40,000 crore / 6 years; 82+ players already signed up
  • ECMS target components: display modules, camera assemblies, battery cells, mechanical parts
  • Import substitution goal: reduce India's electronics import bill (~$72 billion in FY24)
  • National Policy on Electronics (NPE) 2019: overarching framework; target $400 billion production, $190 billion exports by 2025

Connection to this news: The current 18–20% DVA level reflects the limit achievable through final assembly incentives alone. ECMS and SPECS are the government's mechanism to push DVA toward 30–35% by building a domestic component supply base.

AtmaNirbhar Bharat and the Electronics Supply Chain

AtmaNirbhar Bharat (Self-Reliant India) was announced by PM Modi in May 2020, initially as an economic stimulus package of ₹20 lakh crore, but subsequently operationalised as an industrial policy framework across sectors. In electronics, self-reliance is measured primarily through DVA — the proportion of a product's value that is created within India using domestically sourced materials and labour. India's heavy dependence on China for electronics components (estimated at 60–70% of component imports) was exposed during COVID-19 supply chain disruptions and the 2021 global semiconductor shortage. The government's three-tier response — PLI for final products → ECMS/SPECS for components → Semicon India for chips — represents a sequential attempt to build the entire electronics value chain domestically.

  • AtmaNirbhar Bharat announced: May 2020; ₹20 lakh crore economic package
  • India's electronics import dependence: ~$72 billion import bill (FY24), heavily China-sourced
  • DVA current: 18–20%; sectoral target: 30–35% (medium-term)
  • Three-tier policy framework: PLI (products) → ECMS/SPECS (components) → Semicon India (chips)
  • COVID-19 semiconductor shortage (2021): exposed India's import vulnerability

Connection to this news: The 18–20% DVA figure is not a failure — it represents real progress on a historically import-dependent industry — but it also quantifies the distance between current reality and genuine self-reliance in electronics manufacturing.

Key Facts & Data

  • Current domestic value addition in electronics: 18–20%
  • Original PLI target for smartphones: 35–40% DVA by FY26
  • India's mobile phone production: exceeded ₹4.1 lakh crore (FY25)
  • India: world's 2nd largest mobile phone manufacturer by volume
  • PLI scheme for electronics: notified April 2020; incentive 4–6% on incremental sales
  • ECMS allocation: ₹40,000 crore over 6 years; 82+ companies enrolled
  • SPECS: 25% capex incentive on electronic component manufacturing
  • India electronics import bill: approximately $72 billion (FY24)
  • Semicon India Programme outlay: ₹76,000 crore (for fab and ATMP ecosystem)