PLI Scheme for Electronics: ₹25,000 Cr Approved by Finance Ministry

The Finance Ministry has approved a Production-Linked Incentive (PLI) scheme with an allocation of ₹25,000 crore for electronic components, according to a report by CNBC-TV18 citing sources familiar with the matter on January 6.

Following this approval, the Ministry of Electronics and Information Technology (MeitY) is expected to seek Cabinet approval, with an announcement likely during the Union Budget 2025. The industry had reportedly pushed for a higher allocation of up to ₹40,000 crore for the scheme, reflecting the high demand for government support to strengthen India's electronics manufacturing ecosystem. Experts believe that a higher budget allocation could further accelerate India's efforts to become a global leader in electronic component production, as the domestic market is projected to grow significantly over the next few years.

The PLI initiative is expected to cover sub-assemblies such as printed circuit boards (PCBs), batteries, display units, and camera modules. The primary objectives are to boost domestic production, enhance export potential, and reduce import dependency, particularly from China. With geopolitical tensions and concerns over supply chain disruptions, the government is keen to build self-reliance in key sectors, and electronics is at the forefront of this strategy.

In November 2024, Reuters quoted an official stating that the scheme aims to encourage the production of critical components like PCBs, thereby increasing local value addition and strengthening domestic supply chains for various electronics. The official noted that by incentivizing local manufacturing, the government seeks to improve cost efficiency for Indian manufacturers, making them more competitive in global markets. The move aligns with the larger "Make in India" and "Aatmanirbhar Bharat" initiatives, which emphasize self-sufficiency and the creation of a robust domestic manufacturing base.

India’s electronics production has more than doubled over the past six years, reaching $115 billion in 2024, largely driven by mobile phone manufacturing from companies such as Apple and Samsung. With significant investments from global giants, India has emerged as a hub for smartphone production, and the government aims to replicate this success across other segments of the electronics industry.

The PLI scheme is anticipated to attract both domestic and global investments while generating employment opportunities within the manufacturing and related sectors. Analysts predict that the scheme could lead to the creation of tens of thousands of new jobs, particularly in states with established manufacturing clusters such as Tamil Nadu, Karnataka, and Uttar Pradesh. Additionally, the scheme may encourage small and medium enterprises (SMEs) to scale up their operations, contributing to the overall growth of the electronics ecosystem.

The initiative seeks to position India as a significant player in the global electronics and component supply chain. By incentivizing local production, the scheme could help mitigate supply chain risks, promote research and development, and foster innovation within the country. Increased domestic manufacturing of electronic components could also help reduce India's reliance on imports, which currently account for a significant portion of the total electronics demand. This is especially critical in the wake of supply chain challenges posed by the COVID-19 pandemic and global geopolitical shifts.

India currently ranks as the fourth-largest smartphone supplier globally, after China, Vietnam, and South Korea. However, government officials and industry experts believe that with the right incentives, India could further climb the ranks and establish itself as a key player in high-value electronics manufacturing. The scheme’s implementation could further enhance production capacity and deepen the integration of Indian manufacturers within the growing ecosystem of domestic component suppliers.

The government is also reportedly considering additional measures, such as tax incentives and infrastructure upgrades, to complement the PLI scheme and create a more conducive environment for manufacturers. Industry bodies have welcomed the scheme, highlighting that increased domestic production could lead to more stable pricing, reduced import bills, and improved trade balances. Moreover, boosting local production of essential components like batteries and PCBs could have positive spillover effects on other sectors, including electric vehicles and renewable energy.

If implemented successfully, the scheme could contribute to India’s goal of becoming a $300 billion electronics manufacturing industry by 2026. Experts have stressed the importance of ensuring that bureaucratic hurdles are minimized and that the scheme is designed with sufficient flexibility to adapt to changing market dynamics. Collaborative efforts between the government, private sector, and research institutions could play a crucial role in ensuring that India capitalizes on this opportunity to become a global electronics manufacturing powerhouse.

In summary, the PLI scheme represents a significant step toward making India a self-sufficient, innovation-driven hub for electronic components. By addressing gaps in the domestic supply chain and fostering a supportive business environment, the initiative could strengthen India's position in the global supply chain and create lasting economic benefits for the country.