Two bad habits distort discussion of Indian electronics manufacturing. The government announces large production and export numbers, and its admirers declare victory. Critics respond that India merely screws imported parts together and declare the entire policy fraudulent. Both positions are convenient because neither requires understanding a supply chain. The truth is more encouraging than the cynics admit and less complete than official celebration suggests.
The government’s own electronics-manufacturing account identifies mobile phones as the anchor of rising production and exports. Meanwhile, a PRS analysis of the electronics ministry’s grants makes the strategic weakness plain: India has built a significant assembly presence but remains limited in manufacturing depth and design. I can hold both facts in my head. Policy debate should try it.
Assembly is not fake
“Only assembly” is used as though assembly requires a screwdriver, a shed and an inspirational poster. Modern phone production demands yield management, clean processes, testing, logistics, trained labour and exact coordination across suppliers. Factories that meet global quality and delivery requirements acquire capabilities that can support adjacent industries. Workers and managers learn by producing, not by waiting for the perfect semiconductor ecosystem to materialise.
Exports matter because they subject Indian facilities to global competition. A phone shipped abroad cannot survive indefinitely on patriotic purchasing. It must meet cost, quality and schedule requirements set by demanding brands. Large export volumes also give component suppliers a reason to locate nearby; nobody builds a sophisticated plant for an uncertain trickle of orders.
Production-linked incentives helped change the calculation. They reduced the initial disadvantage of locating in an ecosystem that lacked China’s supplier density and infrastructure. Critics call this corporate subsidy, sometimes fairly. Incentives can become permanent rent if targets are weak or benefits reward activity that would have occurred anyway. The answer is transparent, declining support tied to measurable value addition—not pretending industrial policy is unnecessary in a world where every major manufacturing economy practises it.
The Modi government deserves credit for choosing scale. Earlier policy often romanticised small domestic production while tolerating a vast import dependence. Electronics requires large factories, deep capital and ruthless consistency. One cannot create a global supply chain through handicraft metaphors.
The component gap decides the prize
A phone’s value does not sit evenly across its parts. Semiconductors, displays, camera modules, memory, radio components, software and intellectual property capture far more than final assembly alone. If India imports most high-value inputs, local production can grow while the trade and technology benefits remain narrower than headline numbers imply.
Component localisation must therefore become more selective. Governments love announcing a long list of eligible items because every line creates a stakeholder. I would concentrate on areas where India can plausibly build competitive scale: enclosures, batteries, chargers, printed circuit board assembly, camera-module integration, mechanical tooling and selected semiconductor packaging. Success there can fund movement toward harder layers.
Tooling is chronically under-discussed. The moulds, precision equipment, testing systems and process knowledge that allow factories to switch models quickly are strategic assets. China’s advantage is not just cheap labour or subsidies; it is the ability to find a specialised supplier within the same industrial region. India must build clusters where a production problem can be solved in days, not after a component’s customs journey.
Infrastructure reliability remains industrial policy. Ports, power, water, customs clearance and urban transport for workers determine cost more reliably than speeches. State governments compete for flagship plants, then neglect rental housing and bus routes around them. A factory is not an island. Women cannot sustain manufacturing jobs if late shifts are unsafe or commutes consume several hours.
Why Chinese brands still dominate
Commentators sometimes assume local manufacturing should automatically produce strong Indian brands. These are different capabilities. Chinese smartphone companies dominate because they combine aggressive pricing, rapid product cycles, distribution, camera tuning, marketing and detailed knowledge of retail incentives. They often manufacture locally while retaining control over design and brand value.
Indian brands lost ground not because consumers lacked patriotism but because products and support were inconsistent. Buyers spending a month’s salary do not owe a company forgiveness for poor software updates or unavailable spare parts. “Vocal for Local” can open a door; it cannot keep a defective phone in someone’s hand for three years.
A credible Indian brand needs patient capital and a narrow promise. It should not launch twelve models copied from original-device manufacturers and then abandon them. It could build a small line with clean software, guaranteed updates, repairable construction and excellent service in smaller cities. Government procurement can help establish scale, but procurement should enforce quality rather than shelter mediocrity.
Chinese participation also requires nuance. India should scrutinise security, data practices, tax compliance and ownership structures firmly. It should not imagine that abruptly excluding capable firms will create domestic technology. Joint ventures, local management, component sourcing and research commitments can extract value while diversification reduces dependence. Strategic policy is neither open-door innocence nor theatrical prohibition.
Design must become a measured outcome
We count factories, jobs, units and exports because they are visible. Design capability is harder to photograph. Yet engineers deciding antenna layouts, power management, camera processing and product architecture capture knowledge that assembly lines alone cannot. Incentive programmes should report Indian engineering employment, patents of real technical relevance, locally developed tooling and supplier research spending.
Universities need stronger links with production problems. Too many industry-academic partnerships end in a memorandum photograph. Companies should sponsor labs around materials, battery safety, radio design and manufacturing automation, with shared intellectual-property rules established before projects begin. Students should encounter factory constraints, not merely simulated exercises.
Repair and recycling are part of the same strategy. India imports valuable materials, seals them inside devices and then handles electronic waste through fragmented systems. Designing for battery replacement, parts recovery and longer support would reduce dependence while creating skilled work. Manufacturers will resist if rules apply unevenly, so standards must be phased and enforced across brands.
I also want public reporting of incentive costs per job and per unit of incremental value addition. Industrial policy earns legitimacy through evidence. If a scheme works, detailed numbers will strengthen its defence. If it becomes a transfer to firms meeting shallow targets, secrecy will not improve it.
Credit now, pressure next
India’s rise in phone assembly is real. Dismissing it insults workers and misunderstands how industrial ecosystems develop. No country begins at the most complex point of a value chain. Capability accumulates through volume, failure, supplier development and repeated production.
But assembly cannot become a comfortable plateau. The government’s next decade should be judged by domestic value, component exports, design authority and the emergence of trusted Indian firms—not merely by the retail value of devices leaving factory gates. Headline production can rise even while strategic dependence persists.
Make in India has moved electronics from aspiration to industrial fact. That is a meaningful achievement of the current government. Its success now creates a tougher obligation: stop measuring the shell and start measuring what India owns inside it. The difference between a manufacturing base and a manufacturing power lies there.
