India’s Electronics Components Manufacture: Powering The Next Leap In Electronics

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Can India break free from its reliance on imported electronics and emerge as the next global manufacturing giant? The electronics component manufacturing scheme (ECMS) aims to make that leap possible, backed by billions in incentives, ambitious targets, and a tight timeline. But the real question remains: Can India overcome entrenched challenges and reshape its electronics future?

India’s electronics sector is undergoing a structural shift, from assembling finished products to building a self-reliant, globally competitive manufacturing base. Domestic production has grown at over 15% CAGR (FY21-FY24), with exports touching US$35 billion in FY24. The government now targets US$500 billion in total production by FY2030, including US$150 billion in components.

However, the sector remains heavily import-dependent, sourcing 80-85% of its components—including semiconductors and printed circuit boards (PCBs)—from Asia due to limited local design and manufacturing capabilities. To address this, India launched the Electronics Component Manufacturing Scheme (ECMS) in April 2025, its most ambitious initiative yet, alongside other programmes like PLI, SPECS, and MSIPS. These schemes offer combined central and state incentives exceeding 100% of the investment, through a mix of subsidies and tax credits. The incentives, tailored to component categories and production models, aim to reduce import reliance, attract investment, enhance value addition (currently just 15-18%), and integrate Indian firms into global value chains. Driven by ‘Make in India’ and supported by a robust policy framework, India is positioning itself as a key player in the US$2900 billion global electronics market.

Why ECMS? The strategic need

Despite India’s emergence as a major hub for electronics assembly, a staggering 70-80% of components, resistors, capacitors, connectors, and more, are still imported, mostly duty-free under ITA-11. This heavy reliance inflates the import bill, limits domestic value addition, and exposes India to global supply chain shocks. The Covid-19 pandemic highlighted these vulnerabilities, as supply disruptions threatened the entire industry. The ECMS seeks to change this dynamic by enabling India to transition from an assembler to a true manufacturing leader.

Scheme scale, scope, and ambition

The ECMS is designed to catalyse India’s electronics sector by attracting investments of ₹593.5 billion, achieving a targeted production output of ₹4565 billion, and generating 91,600 direct jobs, with many more expected indirectly. The scheme is open to both greenfield (new) and brownfield (existing) investments, covering a broad range of segments, including sub-assemblies, bare components, selected bare components, the supply ecosystem, and capital equipment.

ECMS offers three types of incentives to participating companies. The turnover-linked incentive is calculated as a percentage of incremental turnover over a base year and is reduced by 1% if employment thresholds are not met. This incentive is disbursed upon achieving specific sales or investment targets.

The details are shown in the Fig. 6.

The capex incentive is a percentage of capital expenditure, reduced by 5% if employment criteria are unmet, and is disbursed after investment and the commencement of commercial production. A hybrid incentive combines both turnover-linked and capital expenditure (Capex) incentives for specified goods, providing flexibility based on the nature of the investment and product segment.

Strategically, the scheme aims to reduce India’s import dependence, particularly on China, by strengthening domestic value addition and integrating Indian firms into global value chains. The allocation of incentives operates on a first-come, first-served basis, encouraging early participation.

There is a strong emphasis on quality and innovation, with requirements for design teams and adherence to Six Sigma quality standards; failure to comply may result in exclusion from the scheme. The impact of ECMS extends beyond electronics, supporting the industrial, power, and automotive sectors. State governments also play a supportive role, with some, like Tamil Nadu, offering matching grants to amplify the central scheme’s impact. This collaborative approach between central and state governments, coupled with international partnerships, is expected to further expand the electronics manufacturing ecosystem in India.

What does ECMS cover?

The ECMS is a horizontal scheme, supporting not only consumer electronics but also the automotive, industrial, power, and medical device sectors. It targets:

• Passive components. Resistors, capacitors, inductors, ferrites, specialty ceramics
• Electro-mechanicals. Relays, switches, connectors, heat sinks, sensors, transducers
• Sub-assemblies and bare components. PCBs, camera modules, lithium-ion cells, display assemblies, and their supply chains
• Capital equipment. Tools and machinery for electronics manufacturing

Fig. 5 presents a comprehensive overview of the key target segments within the electronics manufacturing ecosystem. It categorises the industry into four main segments: sub-assemblies, bare components, selected bare components, supply chain ecosystem, and capital equipment. Each segment highlights specific products and components, such as display and camera module sub-assemblies, various types of electronic components, advanced printed circuit boards, and essential supply chain parts. This segmentation provides a clear understanding of the diverse areas of focus and specialisation that drive innovation and efficiency in the electronics manufacturing sector.

Key considerations

• Separate applications must be filed for each target segment product, with only one application allowed per product.
• Applicants in target segments A, B, and C must submit a self-certified statement of consolidated global ESDM manufacturing revenue for FY 2023-24.
• Applicants in target segment D must submit a net-worth certificate showing at least 50% of the proposed investment. If the net worth is lower, a board resolution for the committed investment and funding source is required.
• Bank guarantees are not necessary. However, if the required investment is not made in the first year or the cumulative investment falls below 50% of the threshold, approval may be revoked, rendering the applicant ineligible for incentives.
• Misrepresentation or false claims will result in the return of disbursed incentives with interest.
• Manufacturing through contract manufacturers is not eligible, though minor outsourcing on a job work basis is allowed if it does not constitute a significant part of manufacturing.
• Quarterly review reports (QRR) must be submitted within 30 days from the end of each quarter.
• Applications acknowledged under the SPECS scheme but not approved due to limited budget will be considered under ECMS if they meet the criteria, with investment counted from the date of acknowledgement under SPECS.

Key definitions

• An applicant refers to a company registered under the Companies Act, 2013 or an LLP registered under the LLP Act, 2008.
• For calculating incremental sales, FY 2024-25 is the base year. If a one-year gestation period is chosen (only for target segments A, B, and C), then FY 2025-26 will be the base year.
• Baseline sales refer to net sales of goods manufactured in India during the base year, including those by the applicant, group companies, or joint ventures.
• Net incremental sales are the difference between net sales during the incentive period and those in the base year.
• Employment is measured as the average number of persons employed (direct and contractual) monthly over 12 months.
• Eligible investments include plant, machinery, equipment, associated utilities, R&D, and technology transfer.
• Ineligible investments include land, buildings, consumables, and raw materials.

Incentive structures: Tailored for impact

The ECMS features a total incentive outlay of ₹228.05 billion (excluding administrative expenses), of which ₹210.93 billion is earmarked for target segments A, B, and C, and ₹17.12 billion for target segment D. Incentives are disbursed on a first-come, first-served basis upon submission of eligible claims.

There is an overall incentive ceiling of 50% of the cumulative eligible incremental investment during the scheme’s tenure, excluding additional incentives for specific products.

• Turnover or hybrid-linked incentives. Valid for six years with a one-year gestation period. Claims must be filed within nine months from the end of the relevant financial year.
• Capex-linked incentives. Valid for five years from the date of application acknowledgement. Claims must also be filed within nine months from the end of the year in which commercial production begins.
• Employment incentives. May follow a more extended disbursement schedule.

Recognising the unique challenges of component manufacturing which include high capital costs, prolonged gestation, rapid tech cycles, the ECMS offers differentiated incentives shown in Table 2.

• First-come, first-served. Applications open on May 1, 2025, and incentives are distributed on a first-come, first-served basis.
• Eligibility. Both greenfield (new) and brownfield (expansion) investments are eligible. Separate applications are required for each product segment.

• Segment-specific incentives.

• Sub-assemblies (e.g. display and camera modules). Investment of ₹500 million in year 1 scaling to ₹2.5 billion by year 5. Incentives range from 4% to 1% (display modules) and 5% to 2% (camera modules).
• Bare components (e.g. non-SMD passives, electro-mechanicals, PCBs, Li-ion cells). Investment of ₹100 million in Year 1 rising to ₹500 million. Incentive rates range from 6% to 8% initially, tapering to 3% to 4%.
• Selected bare components (e.g. HDI PCBs, SMD passives). Hybrid incentive combining turnover-linked (up to 8%) and capex-linked (25%) support.
• Capital equipment and supply chain parts. Minimum investment of ₹100 million with 25% capex-linked incentive, subject to employment criteria.

Under the Hybrid incentive for selected bare components, such as high-density interconnect (HDI), modified semi-additive process (MSAP), flexible PCB, and SMD passive components, companies must meet specific cumulative incremental investment, sales, and employment thresholds over six years. For example, HDI and related PCBs require an investment ranging from ₹2 billion in year 1 to ₹10 billion by year 6, with corresponding incremental sales and employment targets. The incentive rate for these is turnover-linked (8% to 4% for HDI/MSAP/Flexible PCB and 5% to 3% for SMD passive components) or capex-linked at 25%.

For the capex incentive, the focus is on the supply chain ecosystem and capital equipment. Eligible parts and components used in sub-assemblies and bare components, as well as capital goods for electronics manufacturing, must have a minimum investment of ₹100 million and meet employment criteria (e.g., 10 jobs per ₹100 million investment). The incentive rate here is 25% of the capital expenditure. This structure aims to boost investment, sales, and employment in the electronics manufacturing sector by offering significant financial incentives linked to performance and capital outlay.

How ECMS is different: A smarter, consultative approach

The ECMS outlines specific criteria for product eligibility across several components. For the display module sub-assembly, applicants must complete the entire sub-assembly process in India, including film on glass (FOG) and chip on glass (COG) processes where applicable, to qualify for incentives; final assembly from semi-assembled products is not eligible. Similarly, for camera module sub-assembly, the complete process, including surface mounting, front on line (FOL), and end of line (EOL) procedures, must be performed in India, and final assembly from semi-assembled products is excluded from incentives. For multi-layer PCBs, from the second year onwards, applicants are required to localise at least one part or component each year, such as process chemistry material, finished chemistry material, solder mask ink, tin balls, or solder.

Enclosure eligibility requires manufacturing from metals, plastics, or glass in India, with finishing or decoration included in the manufacturing process. For Li-ion cells, applicants must ensure that the cells are intended for digital applications (excluding storage and mobility), with a capacity not exceeding 10,000mAh, and in prismatic, pouch, or cylindrical form. From the second year, localisation of at least one component, such as electrolyte, anode electrode, or cathode electrode, is required each year to continue receiving incentives

This differentiated model ensures that even the most capital-intensive segments receive the support needed to scale effectively.

Unlike earlier schemes, ECMS was shaped with deep industry input through consultations with associations like Elcina, global consulting firms, and direct feedback from manufacturers. This led to:

• Product-specific incentives. Higher support for capital-intensive, low-turnover segments (e.g., camera modules) and tailored packages for each vertical
• Support for R&D and design. Encouraging indigenous innovation and prototyping, not just assembly
• Non-fiscal enablers. Streamlined land, utility, and licensing approvals; logistics and export facilitation; quality certification support

Applicants must ensure their proposed investment meets the minimum threshold criteria to qualify for target segments D under the ECMS scheme. They are required to demonstrate financial capability by submitting a net worth certificate that is no older than March 31, 2024. The applicant’s net worth should be at least 50% of the proposed investment; if this is not met, a board resolution confirming the committed investment and its funding source must be provided. The net worth is calculated in accordance with Section 2(57) of the Companies Act, 2013, based on the latest audited balance sheet.

Additionally, applicants must make either greenfield or brownfield investments in the manufacturing target segment goods, submit separate applications for each target segment product, and only one application is allowed per target segment product. Applications acknowledged but not considered under SPECS may be reviewed under ECMS if they meet the necessary criteria. Finally, the governing council will assess both technological and financial capabilities when selecting applicants for the scheme.

Vision and the roadblocks ahead

The push for import substitution in electronics manufacturing is crucial for reducing strategic vulnerabilities and curbing foreign exchange outflows, as the country currently imports a significant portion of its electronic components, especially from China and Hong Kong. Achieving the government’s ambitious target of $500 billion in electronics production by 2030 could create 5-6 million jobs, doubling current employment in the sector and integrating millions more into the workforce through both direct and indirect opportunities. Expanding domestic manufacturing not only boosts exports, helping Indian firms join global value chains, but also enhances sustainability by localising supply chains and reducing the sector’s carbon footprint.

However, the path forward is challenging: component manufacturing requires high upfront investments, faces unfavourable investment-to-turnover ratios, rapid technological obsolescence, and a persistent shortage of skilled talent. To address these, the government is rolling out differentiated support, offering more generous incentives to high-risk, low-scale segments, while also focusing on ecosystem development by supporting capital equipment and supply chain vendors, not just final product assemblers. There is a strong emphasis on achieving global quality standards, such as Six Sigma, and building indigenous design capabilities to ensure India’s electronics sector is not just self-reliant but also globally competitive.

How to apply: Fast-track to incentives

• Online portal. Launched April 2025 for streamlined applications
• Consultation window. Open for industry feedback to fine-tune guidelines
• First-come, first-served. Early applicants are more likely to secure incentives

The ECMS key process begins with the submission of applications through an online portal, where the project management agency (PMA) receives, examines, and appraises applications before making recommendations to the Governing Council (GC). The GC reviews proposals and forwards its recommendations to the competent authority, after which MeitY issues approvals or rejections. For incentives, applicants must submit claims with proper documentation. The PMA conducts audits and appraises claims before recommending approvals.

Disbursements are made by MeitY via direct bank transfer, with partial payments for related-party sales and final payments upon compliance. Baseline and QPRs are crucial for turnover-linked incentives, requiring applicants to include Indian sales data and submit self-certified QPRs within 30 days after the end of each quarter. The baseline determination is a time-bound process to be completed within 35 working days. The GC may revoke approvals if investments are sluggish or if there is a substantial lack of sales performance, making applicants ineligible for future incentives

The big picture: India’s moment to lead

ECMS is more than a policy, it is a paradigm shift from volume-driven subsidies to value-driven support. With the right execution, continued industry–government collaboration, and bold investments, India can transform from a passive assembler to a global electronics manufacturing powerhouse. “This is the first time a policy framework has truly focused on the bedrock of electronics, components. It marks a strategic shift from plug-and-play to design-and-make-in-India,” says Dr Shashank Kumar, President, Elcina.

For entrepreneurs, investors, and engineers, ECMS presents a compelling opportunity. With policies in place and substantial incentives available, the future of India’s electronics sector lies not just in assembly, but in creating the core components of the future—in its labs, factories, and studios.

This article is based on Elcina’s seminar on the Electronics Components Manufacturing Scheme (ECMS): Unlocking Opportunities for India’s Electronics Ecosystem, where keynote address was given by Nirmod Kumar, Director, MeitY. It has been transcribed and curated by Akanksha Sondhi Gaur, Senior Technology Journalist at EFY.