India's Electronics Sector Needs Scale and Design: PLI Scheme Boosted, But Experts Urge Deeper Capabilities

India's ambition to become a global electronics manufacturing hub is gaining momentum, with the government clearing another round of investment proposals under its Production-Linked Incentive (PLI) scheme for electronic components. This latest approval includes 17 projects worth over ₹7,100 crore, adding to the 24 projects previously approved, totaling ₹12,700 crore in investments. The scheme, with an outlay of ₹22,919 crore, aims to significantly boost production and create jobs, with current projects expected to generate ₹1.1 lakh crore in output and over 17,000 employment opportunities.

Industry leaders, however, caution that building manufacturing capacity is only the first step. Pankaj Mohindroo, Chairman of the India Cellular & Electronics Association (ICEA), stated that "for a sustainable global play, we need scale, we need design, and we need a strong component ecosystem to back assembly." He stressed that local design capabilities are "critical if India wants to move beyond being just a manufacturing destination."

Similarly, Ashok Chandak, President of IESA, noted that while new approvals show confidence, strengthening the ecosystem's foundations through "clusters, supply chain depth, and design talent" is crucial. Global competitiveness, he added, relies on more than just cost advantages. The next few years are seen as decisive, especially as global brands diversify their supply chains. Sustained policy support, predictable incentives, and infrastructure development are vital for attracting long-term investments.

Impact

This news has a significant impact on the Indian stock market as it relates to government policy aimed at boosting domestic manufacturing and exports in a key sector. Companies involved in electronics manufacturing, component supply, and related industries may see enhanced growth prospects. The focus on scale and design also signals a shift towards higher value-addition, which could lead to improved valuations for successful companies.

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Glossary

• Production-Linked Incentive (PLI) Scheme: A government scheme that offers financial incentives to companies based on their incremental sales of manufactured goods. It aims to boost domestic manufacturing and reduce import dependence.
• Global Value Chains (GVCs): The full range of activities undertaken by firms to bring a product or service from conception to end use and beyond, involving a sequence of production stages located in different countries.
• Component Ecosystem: The network of suppliers, manufacturers, designers, and service providers that collectively support the production and development of electronic components.