Assembly Lines to Authority: How India’s ESDM SMEs Can Move Up the Global Value Chain
For much of the past decade, India’s electronics manufacturing sector has been defined by scale: large assembly lines, contract manufacturing and rapid capacity creation driven by global realignments. Yet beneath the headline numbers lies a more consequential question: can India’s electronics system design and manufacturing (ESDM) ecosystem, particularly its small and mid-sized enterprises, move from being efficient executors to becoming authoritative players in global value chains?
Recent central government initiatives suggest that the answer increasingly depends on how SMEs respond to a changing policy and market environment.
The Production Linked Incentive (PLI) schemes, now extended and refined across electronics sub-segments, were never meant to be a permanent subsidy. Their strategic intent is clearer today: to accelerate capability creation, deepen localisation and push firms beyond assembly into higher value activities such as design, testing, embedded software, precision components and IP creation. For SMEs, this marks a decisive shift. Scale alone is no longer sufficient; capability is becoming the real currency.
The latest Union Budget reinforces this direction. Its emphasis on manufacturing competitiveness, export enablement, domestic value addition and technology adoption sends a consistent signal: the next phase of electronics manufacturing growth will reward firms that invest in productivity, quality systems and global compliance. Budgetary allocations for infrastructure, logistics modernisation, R&D enablement and MSME credit access are not standalone measures, they are part of a larger architecture designed to reduce friction across the manufacturing lifecycle.
For ESDM SMEs, the implications are profound. Global buyers today are not merely sourcing cost-effective production. They are seeking resilience, traceability and governance. Documentation discipline, cybersecurity readiness, ESG compliance and supply-chain transparency are fast becoming table stakes. The era when an SME could compete on price while postponing investments in systems and standards is drawing to a close.
Encouragingly, central policy is beginning to recognise these realities. Measures to ease MSME credit constraints, promote digital trade infrastructure and streamline customs and export processes directly address the bottlenecks that disproportionately affect smaller manufacturers. The push towards digitised compliance, paperless trade documentation and faster clearances may appear incremental, but for exporters operating on thin margins and tight timelines, these changes can materially alter competitiveness.
Yet policy alone cannot deliver transformation. The transition from assembly to authority requires a mindset shift within the SME ecosystem itself. Many electronics manufacturers that have grown rapidly over the past few years now face a strategic crossroads. Continue as price-takers in volatile global markets, or invest in becoming trusted, high-capability partners embedded deeper into customer value chains.
This is where industry bodies play a critical role. Organisations such as the Confederation of Indian Manufacturers in ESDM and IT (CIMEI) are increasingly positioned not merely as representative platforms, but as capability catalysts, helping SMEs interpret policy intent, adopt best practices and engage constructively with regulators and ecosystem partners. The gap between policy design in New Delhi and execution on the factory floor remains wide; structured industry feedback and collective learning are essential to narrowing it.
The Budget’s broader macroeconomic stance also matters. Continued capital expenditure, focus on manufacturing-led employment, and a steady approach to fiscal consolidation provide a degree of predictability that manufacturers value deeply. Electronics SMEs, in particular, require long investment horizons to justify spending on tooling, testing infrastructure and design talent. Policy stability, even more than incentives, underpins these decisions.
Ultimately, India’s ambition to emerge as a serious global electronics manufacturing hub will be judged not by headline export numbers alone, but by the depth and resilience of its SME base. Large anchor manufacturers can attract attention, but it is SMEs that provide supply-chain density, innovation agility and long-term sustainability.
The opportunity before India’s ESDM SMEs is therefore both structural and time-sensitive. Central government initiatives and recent budgetary signals have created a supportive runway. What happens next depends on whether SMEs use this moment to upgrade capabilities, embrace governance and reposition themselves as indispensable partners in global electronics value chains.
As India’s ESDM SMEs navigate this critical transition, forums that bring together industry leaders, policymakers and ecosystem partners play an important role in shaping informed, forward-looking conversations. It is in this context that platforms such as “Manufacturing Reimagined: Build Better. Build Beyond.”, being organised by SME Communities in association with FIEO, seek to facilitate practical dialogue on how electronics manufacturers can translate policy intent into scalable, globally competitive outcomes.
