India’s efforts to bolster domestic manufacturing, reduce reliance on Chinese imports, and transform into a global manufacturing hub are bearing fruit, according to recent statements by government officials.
Since the launch of the country’s production-linked incentive (PLI) scheme in 2020, investments exceeding $17 billion have poured into various sectors, pushing India closer to its goal of becoming a self-reliant manufacturing power.
The PLI scheme, which offers cash incentives ranging between 4% and 6% on incremental sales for manufacturers, has attracted significant attention across 14 key sectors. These sectors include electronics, pharmaceuticals, textiles, and white goods. As a result, India is not only expanding its domestic manufacturing base but also making strides towards decreasing imports, especially from China, which has been a long-standing supplier for many products entering the Indian market.
Electronics Manufacturing at the Forefront
India’s rapid growth in electronics manufacturing has been one of the standout successes of the PLI scheme. Amardeep Singh Bhatia, Secretary of the Department for Promotion of Industry and Internal Trade, highlighted that India is now the second-largest producer of mobile phones globally. One key example is Apple’s increasing reliance on India, with the company’s iPhone exports from the country exceeding $12 billion in the 2023-24 fiscal year.
This surge in electronics manufacturing has had a knock-on effect on employment, with nearly one million jobs created in the four years since the PLI programme’s introduction. Production figures are equally impressive, reaching a total value of approximately ₹11 trillion ($131.6 billion) over the same period.
As India becomes a vital node in global supply chains for electronics, it is not resting on its laurels. The government has signalled plans to expand its domestic production of laptops, tablets, computers, and servers, further reducing dependence on imports, particularly from China. This marks a continuation of the country’s policy aimed at shifting supply chains for high-demand IT hardware to domestic manufacturers.
Reducing Dependence on China
India’s effort to reduce imports from China forms a core part of its manufacturing push. This strategy gained additional momentum with the introduction of the “import management system” in November 2023. Under this system, companies importing laptops and tablets are required to register with the authorities—a measure aimed at controlling and reducing such imports over time.
On Tuesday, the government announced a three-month extension to this system, a move seen as an additional step toward solidifying domestic manufacturing in the IT hardware space. While India had previously considered imposing a licensing system on the import of laptops and related devices, this proposal was rolled back in favour of a more measured approach through registration and import management.
The Indian IT hardware market, which includes laptops, is currently valued at approximately $20 billion, with domestic production accounting for nearly $5 billion. With imports from China alone contributing over $9 billion to India’s IT hardware needs in the 2023-24 fiscal year, cutting back on these imports has become a strategic priority.
Strengthening Local Manufacturing
In its first phase of implementation, the PLI scheme has approved incentives for 27 IT hardware manufacturers, including major global players such as Acer, Dell, HP, and Lenovo. The government expects these companies to produce goods worth $42 billion in the coming years, marking a significant shift toward localised production.
Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), a Delhi-based think tank, sees this as an opportunity for India to assert itself in the global laptop and IT hardware market. He notes that India has a compelling case for developing its own manufacturing capabilities, particularly as demand for these devices grows due to rising incomes, expanding business activities, and the increasing use of technology in education.
Local manufacturers are already responding to these signals. Dixon Technologies, a prominent Indian electronics manufacturer, has qualified for the PLI scheme and is positioning itself to meet 15% of India’s domestic demand for laptops by the 2025-26 fiscal year. The company plans to create production capacity of two million units by then, with Prithvi Vachani, Dixon’s Executive Director, noting that they are working to secure more local sourcing for components as their production scales.
Dixon’s collaboration with global firms such as HP to manufacture laptops and computers in India is emblematic of the broader trend in India’s electronics sector. By partnering with established global companies, India aims to build local expertise, reduce import dependency, and cultivate a more robust manufacturing ecosystem.
Future Prospects
India’s efforts to boost domestic manufacturing are taking place at a time when global supply chains are being re-evaluated, especially with the rise in geopolitical tensions and concerns about over-reliance on specific regions, such as China, for critical goods. The success of the PLI scheme thus far suggests that India is well-positioned to capitalise on this shift by attracting investment and becoming a major player in global manufacturing.
As the country continues to extend its manufacturing capacity across sectors, particularly in electronics and IT hardware, the aim is not only to meet domestic demand but also to position India as a significant exporter. With the government’s proactive steps to manage imports, incentivise production, and foster partnerships between local firms and global manufacturers, India’s ambitions to reduce its dependence on imports from China and strengthen its manufacturing base are gradually becoming a reality.
This transformation will likely take time, but the early success of the PLI scheme indicates that India’s approach is on the right track. If sustained, these efforts could reshape the country’s industrial landscape and accelerate its emergence as a key manufacturing hub for the future.
Image source: wasatchglobal.com
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