What did the Economic Survey 2025-26 have to say on electronics this time? Will the Union Budget push it further up India’s export ladder, strengthening mobile manufacturing, semiconductors, data centres and global value chains?
As the countdown to the Union Budget begins, the Economic Survey 2025-26, tabled on January 29, 2026, offered a clear view of how India’s industrial and trade landscape is evolving. One theme stands out; electronics, led by mobile phone manufacturing, has moved to the centre of India’s growth, export, and global integration strategy.
Electronics enters the top export league
The Survey highlighted the speed with which electronics has climbed India’s export ladder. In three years, the sector has risen from the seventh-largest export category in FY22 to the third-largest and fastest-growing by FY25.
That momentum has continued into the current year. In the first half of FY26, electronics exports touched US$22.2 billion, putting the sector on track to become India’s second-largest export segment.
Behind this rise is a sharp increase in domestic production. In FY25, electronics production grew nearly 19 per cent year-on-year to ₹11.3 trillion. Exports surged 37.5 per cent to ₹3.3 trillion, while imports rose at a slower 15 per cent to ₹8.4 trillion.
Mobile phones power the transformation
At the heart of this shift is mobile phone manufacturing. The Survey identified mobile phones as the central growth engine of India’s electronics story. Over the past decade, production value in this segment has increased almost 30-fold, from ₹180 billion in FY15 to ₹5.45 trillion in FY25.
This surge has fundamentally altered India’s position in the global electronics market. As the Survey noted, India has transitioned “from a net importer to the world’s second-largest mobile phone manufacturer,” with over 300 manufacturing units today, compared to just two units in 2014.
Targeted policy support has been critical. Under the Production-Linked Incentive (PLI) scheme for large-scale electronics manufacturing, investments of ₹137.59 billion have resulted in cumulative production of around ₹9.34 trillion and exports of ₹5.12 trillion as of September 2025.
The policy focus is also widening. The PLI Scheme 2.0 for IT Hardware, launched in May 2023, has already generated ₹144.63 billion in production and ₹8.92 billion in investments, indicating early traction in laptops, servers, and related hardware.
Trade resilience amid global uncertainty
The electronics boom is part of a broader strengthening of India’s trade performance. The Survey recorded total exports of US$825.3 billion in FY25, followed by US$418.5 billion in the first half of FY26. While services exports remain a major driver, the expansion of higher-value manufacturing exports, especially electronics, pharmaceuticals, and electrical machinery, has strengthened resilience amid rising protectionism and tariff uncertainty.
Merchandise trade data for FY26 reinforced this trend. Between April and December 2025, merchandise exports grew 2.4 per cent year-on-year, while non-petroleum, non-gems and jewellery exports rose 6 per cent. Electronics stood out, recording 35.1 per cent year-on-year growth, making it the single largest contributor to export acceleration.
An analysis of PLI sectors showed how policy support is reshaping trade patterns. Between FY21 and FY25, exports from PLI sectors grew at an average annual growth rate (AAGR) of 10.6 per cent, with electronics exports expanding at a 38.8 per cent AAGR.
Import growth in electronics, at 17.6 per cent, has been comparatively moderate, reflecting expanding domestic capacity alongside continued dependence on imported intermediates.
Manufacturing recovery and higher-value shift
Beyond electronics, the Survey pointed to a broader industrial recovery. Industry Gross Value Added (GVA) grew 7.0 per cent year-on-year in the first half of FY26, recovering from 5.9 per cent growth in FY25. Manufacturing led this rebound, with GVA growth accelerating from 7.72 per cent in the first quarter to 9.13 per cent in the second quarter.
This improvement is attributed to “structural changes, including a shift towards higher-value manufacturing, better industrial infrastructure through economic corridors, and increased technology adoption and formalisation.”
Medium- and high-technology segments now account for 46.3 per cent of India’s total manufacturing value added, placing India among a small group of middle-income economies moving towards more sophisticated production structures.
Reflecting this progress, India’s Competitive Industrial Performance ranking improved to 37th in 2023, up from 40th in 2022.
Semiconductors and strategic capability
The Survey commended the success of the India Semiconductor Mission (ISM). As of August 2025, 10 semiconductor manufacturing and packaging projects had been approved across six states, totalling around ₹1.6 trillion in investment.
Under the broader ₹760 billion semiconductor and display manufacturing programme, approvals include Micron’s ATMP facility, Tata Electronics’ semiconductor fab, one compound semiconductor fab, and multiple packaging units, along with support for 24 manufacturing projects and 100 chip-design firms.
Complementary schemes such as the Electronics Component Manufacturing Scheme (₹229.19 billion outlay) and SPECS, which offers a 25 per cent capital expenditure incentive and has approved 58 projects worth ₹220.81 billion.
The Survey also mentioned the growing importance of digital infrastructure. India’s installed data centre capacity stands at around 1280MW, with about 130 privately operated data centres and 49 government-run facilities.
Driven by cloud computing, artificial intelligence, IoT, and 5G adoption, capacity is projected to reach approximately 4 GW by 2030.
Global value chains and the path ahead
The Economic Survey 2025-26 examined India’s integration into global value chains through backward linkages. India’s Backward Value Added in Exports (BVAX) ratio rose from 10.7 per cent in 1995 to 25.5 per cent in 2012, before moderating to 17.2 per cent in 2020.
Vietnam’s BVAX, by contrast, reached nearly 48 per cent, reflecting deeper GVC integration and larger export volumes.
The report argued that the calibrated deepening of such linkages, supported by efficient logistics, predictable regulation, and competitive tariffs, can drive export growth, employment, and domestic capability-building.
With the Union Budget scheduled for February 1, all eyes are now on what the government has in store for the electronics sector and how it plans to build on this momentum.
