India has earned the right to celebrate its rise as a major phone-manufacturing location. Factories, jobs and exports are not accounting illusions. But celebration becomes dangerous when it turns assembly into the finish line. A phone can be put together in India while much of its value—chips, displays, camera modules, intellectual property and high-end machinery—remains imported.
The government’s policy direction is visible in the Ministry of Electronics and Information Technology’s incentive programmes. PRS’s analysis of MeitY’s demands for grants is useful because it asks what public spending is attempting to change. In my view, the first phase succeeded at scale assembly. The second phase will be harder because ecosystems cannot be ordered into existence by notification.
Component manufacturing requires reliable power, chemicals, tooling, logistics, skilled technicians and patient capital. It also requires demand across brands. A supplier will not build an advanced facility for patriotic applause. It needs predictable volumes and customers who meet quality commitments.
Assembly was not fake progress
Critics on the left often dismiss assembly as “screwdriver technology.” That phrase is clever and incomplete. Assembly creates process knowledge, worker training, supplier relationships and export discipline. Countries do not teleport from imports to semiconductor leadership. They climb manufacturing ladders.
The government deserves credit for making electronics scale a national objective and using incentives to overcome India’s historical disadvantages. Production-linked incentives are not pure free-market policy; they are an industrial bet. The honest question is whether public support creates capabilities that survive after incentives decline.
That requires transparent evaluation. How much domestic value is added? Which components are local? What wages and skills are created? How concentrated are benefits among a few firms? Export totals matter, but gross export value can flatter an industry dependent on imported inputs.
Why Chinese brands still matter
Chinese smartphone brands remain formidable in India because they built distribution, service networks and products tightly matched to price-sensitive consumers. Nationality does not erase competence. They popularised large batteries, fast charging and aggressive specifications across mid-range phones. Indian policy cannot wish that consumer value away.
The sensible objective is not to make Chinese brands disappear. It is to ensure any company selling at scale in India contributes more deeply to the Indian ecosystem while complying with law. Supplier development, local R&D and export commitments matter more than flag-themed advertising.
Indian brands also need to earn consumer trust rather than request it. Buyers remember inconsistent software, rebadged hardware and weak updates. “Indian” is a meaningful advantage for some customers, but it cannot compensate indefinitely for inferior products. Industrial policy should create conditions for competitiveness, not shelter mediocrity.
Design is where the durable value lives
The deeper prize is design capability: engineers developing boards, radio systems, power management, camera processing and industrial design. Manufacturing without design can create employment, but design makes the ecosystem harder to relocate. India’s software strength should connect with hardware engineering instead of remaining a neighbouring industry.
Government procurement can help by rewarding security, repairability and domestic intellectual property without writing tenders for favoured firms. Universities need stronger electronics laboratories and industry-linked training. Smaller suppliers require testing infrastructure. Customs policy must remain predictable; sudden changes make supply-chain planning expensive.
I support the government’s push, but I want less triumphalism and more measurement. A factory inauguration is the beginning of an industrial story. The relevant photograph comes years later, when local suppliers can meet global standards without permanent protection.
India has proved it can assemble at scale. The next phase will reveal whether it can capture knowledge, components and design. That is a tougher test—and the one worth passing.
