Global companies are increasingly becoming aware of the importance of minimizing risk, and are seeking ways to make their supply chains resilient and diversified. In this scenario, there is a new emerging market vying to meet American consumer demand: India.
American importers have been cautious about forming long-term deals with Indian electronics manufacturers. In the past, political instability as well as a complex set of tariff laws made trade with India difficult. However, for the past several years, India’s government has been stable, with a focus on attracting foreign countries to invest in their growing manufacturing base.
Being the youngest and second most populous country in the world—with a growing population of 1.4 billion—there is no dearth of consumer demand in India.
Many sectors of India’s economy are self-sufficient, for example automotive manufacturing—a vast majority of cars bought in India are manufactured in the country. India hosts American, British, Italian, Japanese, German, Korean, Chinese, French, Swedish, and even Turkish brands. But to get to even a fraction of the scale of China, India will need to become a hub for manufacturing and exporting electronics globally.
Mobile Phones: India’s Success Story
With the 2014 “Make in India” initiative and a 2017 infrastructure stimulus toward building a more connected economy, India focused first on the most critical areas of the Indian market — mobile phones and TVs. As a result, they created incentives for those two industries at national and state levels.
Major phone manufacturers responded — they asked how they could create an ecosystem and where the most applicable market was. Since most Indians’ introduction to the internet is on their mobile phone, with the cheapest data costs in the world — India seemed like the answer.
The Indian Government persuaded Samsung and Apple to manufacture phones in India. The initial consumption was massive— within two years, 100% of phones made in India were used in India, resulting in lower imports. Since then, Apple and Samsung started to export out of India, to the extent of 70-100 million phones, over the last couple of years. In fact, 95 percent of Indian smartphones were manufactured within the country in 2019, up from 19.9 percent in early 2014. Samsung is continuously improving its production capacity in India to reach 29% of global production by the end of 2022.
Can this trajectory be replicated in other electronics subsectors?
With the goal of producing $300 billion in electronics by 2026, up more than 3.5 times last year’s output, India is using its successful mobile phone model on a much larger scale. This includes doling out over $10 billion in subsidies to semiconductor manufacturing companies. Aside from financial incentives, the Indian government is enticing foreign manufacturers with more straightforward tariff laws and faster business applications. So far, these initiatives have been lucrative; the Indian Semiconductor Mission (ISM) has already received five applications from foreign companies for a total investment of $20.5 billion.
India needs to build infrastructure that supports all three steps of electronics manufacturing: final assembly, submodule, and components. India is already proficient at final assembly; however, this step accounts for only 10 to 20 percent of the electronics market.
Examples of submodule manufacturing are the assembly of phone or TV displays. Fortunately for India, a robust submodule manufacturing ecosystem seems on the horizon. Nokia, known for submodule manufacturing, has recently increased its investment in its Indian branch.
‘Components’ refers to the creation of microprocessors, memory, storage, GPUs, ancillary chips, and power management chips—none of which India is currently capable of manufacturing. China is also trying to acquire this capability. To do so would require a semiconductor fabrication plant costing $8 billion or more.
A handful of companies control this space — Intel, TSMC, GlobalFoundries, Infineon Renaissance, TI — and to acquire this critical capability would mean convincing one of them to have a presence in India. (Read my blog Vedanta and Foxconn Partner to Manufacture Chips in India.)
Not many countries have the capacity to become a second factory (after China) for the world. In this sense, India’s strength lies in its sheer numbers. Its young demographic comes with a sharp focus on STEM education and vocational training. Additionally, labor rates are among the cheapest on the planet, alongside Vietnam’s. Indians have a concept, jugaad, which roughly translated means a flexible approach to problem solving — there is a national instinct to figure out ways to do things in innovative and cost-effective ways.
Last updated: December 26th, 2025
