India’s electronics strategy must transition from assembly-led gains to component-led manufacturing, a Niti Aayog report released on Friday said. In its quarterly Trade Watch report, the government think-tank said that in order to transition to the next level of manufacturing, incentives to the sector needs to be aligned toward domestic value addition, sustained R&D, and ecosystem deepening supported by anchor investments that transfer technology, improve standards, and generate stable demand for local suppliers.
According to the report, domestic electronics manufacturing has expanded rapidly but remains highly concentrated in mobile phones, with gradual diversification into industrial electronics, components, automotive electronics, and consumer devices. It says that India’s tariff structure is more protective than peers like China and Vietnam, supporting domestic assembly but it raises costs for component-intensive production and weakens India’s integration into global supply chains.
On cost competitiveness, the report suggested coordinated fiscal, trade, and logistics reforms to close persistent structural cost gaps. According to Niti Aayog, while recent FTAs improve external market access, greater emphasis is required on predictable domestic procurement, export finance, and regulatory simplification to attract investments especially in a turbulent geopolitical environment.
These measures, it said, can anchor India’s transition from a manufacturing base to a globally competitive electronics ecosystem and support the $500 billion manufacturing ambition by FY30.
India’s electronics exports are concentrated in mobile phones, which make up 52.5% of the basket, while power equipment and wires contribute smaller shares. Imports are dominated by integrated circuits (23.7%), mobile phones (17.5%), and data-processing machines (10.6%).
The US, UAE and Netherlands have emerged as the biggest export market for India’s electronics, with mobile phones driving most of this trade. However, Niti Aayog noted that key markets for high-tech components like integrated circuits and semiconductors remain dominated by China, Hong Kong and Taiwan.
According to the Niti report, India must strengthen electronics export performance by addressing structural cost disadvantages, expanding targeted export financing, improving logistics efficiency, and boosting domestic manufacturing of strategic components.