India’s Electronics Manufacturing Surge: How PLI Is Triggering a Multi-Sector

India’s electronics manufacturing story has crossed an important threshold. What was once discussed as a policy ambition is now visible in export numbers, production scale and ecosystem depth. The headline achievement is striking: India has shipped nearly USD 50 billion worth of iPhones over the last five years, establishing electronics as one of the country’s most dynamic export engines. Yet focusing only on smartphones risks missing the deeper structural shift underway. This is not merely a mobile-phone success story. It is an industrial chain reaction with meaningful implications for SMEs across raw materials, logistics, packaging, power, machinery and semiconductors.

The PLI Effect: Scale, Speed and Anchoring Global OEMs

At the centre of this transformation sits the Production Linked Incentive (PLI) scheme. Under PLI-led electronics manufacturing, India has attracted ₹2 lakh crore of investment, generated 12.6 lakh jobs, enabled ₹7.5 lakh crore of exports, and achieved ₹18.7 lakh crore in cumulative production. Apple’s role illustrates the scale. The company alone is producing ₹2 lakh crore worth of iPhones in India, exporting roughly ₹1.5 lakh crore, and has emerged as the country’s single largest smartphone exporter. In FY25, iPhones became India’s top smartphone export item, reinforcing the country’s position within global electronics supply chains.

This momentum extends beyond a single company or product category. According to Union Minister for Electronics and Information Technology Ashwini Vaishnaw, India’s electronics exports crossed ₹4 lakh crore (USD 48.2 billion) in 2025 for the first time. This milestone reflects not a one-off spike, but the cumulative impact of rising production, expanding OEM participation and policy-backed scaling. The outlook into 2026 strengthens further, with four semiconductor manufacturing plants expected to begin commercial operations, enhancing India’s export capability and reducing import dependence in high-value segments.

Why Electronics Manufacturing Matters Beyond Mobiles

Critically, the real economic significance of this expansion lies in its spillover effects. Electronics manufacturing functions as a demand anchor, pulling in a layered SME ecosystem far beyond assembly lines. Every smartphone produced requires inputs from metal suppliers, specialty chemical manufacturers, plastics processors, copper and aluminium fabricators, glass producers and rare-earth handlers, many of which are SME-led enterprises. As volumes scale, procurement shifts from fragmented sourcing to long-term contracts, improving capacity utilisation, pricing visibility and cash-flow stability for upstream suppliers.

Logistics, Packaging and Industrial Services Gain Momentum

The logistics sector is another major beneficiary. Electronics exports are high-value and time-sensitive, demanding precision logistics, secure warehousing and compliance-heavy cross-border handling. This has driven sustained demand for SME freight forwarders, warehouse operators, bonded logistics providers, packaging specialists and last-mile partners. For many of these firms, electronics exports represent their first sustained exposure to global trade flows, raising operational standards and integration with international customers.

Packaging, often overlooked, has quietly moved up the value chain. Export-grade electronics require anti-static materials, precision moulded packaging, vibration-resistant designs and sustainability-compliant solutions. As production volumes rise, packaging transitions from commoditised supply to engineered solutions, allowing SMEs to command better margins and build specialised capabilities aligned with global quality benchmarks.

Electronics manufacturing also drives demand across the power, automation and industrial machinery sectors. Clean rooms, precision assembly and testing environments require reliable power systems, HVAC infrastructure, automation tools, robotics, testing equipment and advanced tooling. SMEs supplying transformers, switchgear, control systems and industrial machinery increasingly find themselves tied into long-term industrial demand rather than cyclical project-based orders.

The Semiconductor Multiplier Effect

The upcoming semiconductor fabs amplify this multiplier effect. Semiconductor manufacturing is not a standalone industry. It catalyses demand across ultra-pure chemicals, industrial gases, precision engineering, water treatment systems, waste management services, clean logistics and chip packaging. Many of these segments are SME-dominated, where consistent demand and long-term contracts can fundamentally alter business viability and investment appetite.

Financial Services and Insurance

As electronics manufacturing and its SME ecosystem scale up, financial and insurance sectors emerge as quiet but significant beneficiaries. Manufacturing expansion reshapes balance sheets, working capital cycles and risk profiles, driving demand for working capital, supply-chain finance, term loans and trade finance instruments such as letters of credit, guarantees and forex hedging. Export-linked electronics supply chains offer lenders diversified, predictable cash flows. Insurance demand deepens across marine cargo, product liability, transit, machinery breakdown, cyber and business interruption covers. Over time, deeper credit and insurance penetration strengthens SME resilience, improves asset quality for financial institutions, and creates a self-reinforcing financial flywheel aligned with industrial growth.

Trade Agreements as a Strategic Cushion

From a policy perspective, PLI has delivered on its first-order objectives. It accelerated capacity creation, anchored global OEMs, created employment at scale and improved India’s credibility as a manufacturing base. However, structural limitations remain. Domestic value addition, while improving, still trails East Asian peers. Semiconductor and advanced component ecosystems are in early execution stages. MSME integration remains uneven across regions. External pressures persist, particularly tariff actions by the US and broader geopolitical trade frictions affecting certain export routes.

This is where India’s expanding network of trade agreements with the EU, UK, UAE, Australia and other partners becomes strategically important. As exports to the US face tariff-related headwinds, diversified trade corridors are cushioning the impact. Electronics manufacturers are increasingly aligning production with FTA-friendly markets, reducing overdependence on any single geography and improving long-term resilience.

From Incentives to Industrial Maturity

The larger signal is clear. PLI was never meant to be a permanent crutch. Its real contribution lies in changing trajectory. Electronics manufacturing in India has moved from pilot-scale ambition to industrial reality. The next phase will depend less on incentives and more on semiconductor execution, SME capability building, logistics efficiency, trade facilitation and sustained global competitiveness.

Seen through this lens, India’s electronics surge is best understood as an industrial ecosystem accelerator. When one globally competitive sector scales, it triggers a domino effect across multiple SME-led industries. Large OEMs gain reliability and scale. SMEs gain volume certainty, technology exposure and access to global markets. Growth becomes more distributed, resilience improves and competitiveness compounds. That structural win-win is now quietly taking shape beneath India’s electronics export numbers, and it is where the real long-term value lies for India’s SME communities.