Government’s Push to Strengthen Domestic Electronics Supply Chain
The Indian government is preparing to introduce a new incentive scheme aimed at boosting electronic component manufacturing in the country. This initiative will address key challenges such as high capital investment, long gestation periods, and technological barriers, ultimately reducing India’s reliance on imported components.
A Tailored Approach for Component Manufacturing
Unlike the broader Production-Linked Incentive (PLI) scheme used for Electronic Manufacturing Services (EMS) this upcoming scheme will adopt a customized approach for different components according to Sushil Pal, Joint Secretary, Ministry of Electronics and Information Technology (MeitY).
“We cannot handle the component manufacturing scheme with a single brush, as we did with the EMS sector. Each component faces unique challenges and requires a specially designed incentive structure,” Pal stated at the 14th edition of Source India – Electronics Supply Chain 2025, organized by the Electronics Industries’ Association of India.
Key Features of the New Scheme
🔹 Segment-Specific Incentives: Each component type—whether mechanical, magnetic, sensor-based, or SMT components—will have a customized incentive plan.
🔹 Combination of Capex and Turnover-Based Incentives: The scheme will include elements of both capital expenditure (capex) support and turnover-based incentives, making it financially viable for manufacturers.
🔹 Reducing Dependency on Imports: India currently relies heavily on imported capital equipment for electronics manufacturing. Any disruption in these imports jeopardizes production and competitiveness. This scheme aims to reduce this dependency.
🔹 Government-Industry Collaboration: The MeitY is actively working with industry associations, including ELCINA (Electronic Industries Association of India), to finalize the scheme.
Industry Leaders Welcome the Move
Custom Approach for Different Components
Atul Lall, Managing Director and Vice-Chairman of Dixon Technologies, emphasized the need for a case-by-case approach rather than a one-size-fits-all scheme.
“Every component sector is different. A module differs from a mechanical component, which in turn differs from a magnetic component, a sensor, or an SMT component. We are glad the government is recognizing these differences,” Lall said.
Critical Role in Defense and AI-Powered Systems
Karanbir Singh Brar, General Officer Commanding (GOC) of Dakshin Bharat Area, highlighted that electronics will constitute 70-80% of future defense systems, and artificial intelligence (AI) will dominate the sector in the coming years.
“A strong component ecosystem is essential for national security. We have overlooked this aspect for too long,” he noted.
The government is already developing two Defense Corridors, one in Tamil Nadu and another in Uttar Pradesh, which could benefit from domestic component manufacturing.
A Long-Awaited Boost for India’s Electronics Industry
The upcoming incentive scheme marks a crucial step in strengthening India’s electronics supply chain, reducing import dependence, and enhancing global competitiveness. With PLI schemes proving successful in smartphone and semiconductor manufacturing, this initiative could be a game-changer for the electronic components industry.
FAQs
1. What is the objective of India’s new electronic component manufacturing scheme?
The scheme aims to boost domestic production of electronic components, reduce reliance on imports, and make India a global hub for electronics manufacturing.
2. How is this different from the PLI scheme for EMS?
Unlike the EMS PLI scheme, this initiative takes a customized approach for different electronic components, offering segment-specific incentives.
3. What incentives will the scheme provide?
The scheme will include capex support, turnover-based incentives, and other financial assistance tailored to specific component types.
4. Why is domestic component manufacturing important?
India imports a large share of its electronics components. A strong domestic component ecosystem will enhance self-reliance, reduce production disruptions, and improve national security.
5. How will the defense sector benefit from this initiative?
With electronics making up 70-80% of modern weapon systems, this scheme will boost local component availability, supporting defense manufacturing and AI-driven military technology.
