India’s electronics manufacturing landscape is poised for a major leap as the Union Cabinet has approved a ₹22,919 crore Production-Linked Incentive (PLI) scheme focused exclusively on passive (non-semiconductor) electronic components. The move is seen as a critical step toward building a self-reliant component ecosystem and could be a game-changer for Electronics Manufacturing Services (EMS) players.
A First for Passive Components
Announced by Union Electronics and IT Minister Ashwini Vaishnaw on March 28, the scheme aims to boost domestic value addition and support backward integration in the electronics supply chain.
“This is the first PLI scheme dedicated to passive components. It will attract ₹59,350 crore in investments, generate ₹4.56 lakh crore in production, and create over 91,600 direct jobs over the next six years,” the minister stated.
These components form the backbone of a wide array of devices used in sectors like telecom, automotive, consumer electronics, medical technology, and power systems.
EMS Sector Under the Spotlight
Following the announcement, shares of EMS companies are expected to draw market attention. Analysts noted that the government’s emphasis on domestic value creation could benefit the sector, especially firms with integrated supply chains and component-level manufacturing capabilities. While some market participants highlighted margin challenges for certain players, others indicated that long-term structural tailwinds remain intact.
Despite some near-term volatility, exacerbated by U.S. tariff-related developments, experts believe EMS companies could benefit as India becomes a more attractive alternative in global supply chains.
Why Now? A Timely Push Amid Global Disruptions
The timing of this policy move is strategic. With the U.S. recently imposing 26% reciprocal tariffs on Indian goods, and similar levies on nations like China and Vietnam, India’s relatively lower export exposure and better tariff structure make it a more favorable manufacturing base.
Experts noted that India’s lower tariff rates compared to peers like China and Vietnam could boost its EMS industry as global supply chains diversify.
Sectoral Performance
India’s domestic electronics production has soared from ₹1.90 lakh crore in FY15 to ₹9.52 lakh crore in FY24—a CAGR of over 17%. Exports, too, have risen from ₹0.38 lakh crore to ₹2.41 lakh crore in the same period, growing at more than 20% annually.
Still, the country faces a substantial import dependency for passive components. As per industry estimates, the non-semiconductor component industry stood at $13 billion in 2022 and is projected to reach $37 billion by 2030—still leaving a significant domestic demand-supply gap.
PLI 2.0: Building the Backbone of Electronics Manufacturing
This new scheme is part of the broader effort to integrate Indian manufacturers into global value chains (GVCs). It also aims to reduce import dependence and ensure that India climbs higher in the electronics manufacturing value ladder.
The government emphasized the scheme’s strategic vision: enhancing domestic capability, creating a robust supply chain, and fueling India’s ambition to become a global electronics powerhouse.
Conclusion
While optimism is high, some experts also advised caution. Based on market analysis, a significant portion of China’s exports are high-complexity products, whereas India’s share remains comparatively lower. Despite the China+1 narrative, India’s gains in high-tech exports have been limited so far.
Nevertheless, the consensus remains that the PLI scheme could provide a much-needed boost for the EMS sector and help position India more favorably in the global electronics manufacturing ecosystem.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice.
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