What India’s Electronics SMEs Must Do to Become Global Design-Led Manufacturers in India
By Sanjeev Keskar, Chief Executive Officer, Arvind Consultancy
The ESDM (electronics systems, design and manufacturing) industry is one of the fastest-growing industries in India where a major section of the 1.42 billion population is handholding smartphones or tablets or they are delved into working in laptops, which are connected to routers for internet connection.
Electronics at home include televisions, printers, washing machines and air-conditioners. Total electronics market in India in 2024 was around $150 billion according to report published by MeitY (Ministry of Electronics and IT). However, the domestic manufacturing value addition is only 15 percent to 20 percent, which is a very big challenge for this industry. This industry is expected to grow to $400 billion by 2030 as per this report by MeitY which includes $280 billion in local demand and $120 billion of exports.
Analyzing the value chain of any electronic product suggests that 40% to 50% value is in components of PCB which are semiconductors, passives, connectors, display, bare PCB and battery. Now, there is hardly any component manufacturing ecosystem existing. We are importing more than 90 percent components as we don’t have domestic manufacturing of these components, so India missing out on component value.
Next big value is in IP and Technology, semiconductor chip design and electronic product design. We are doing very well as design services for the global companies for design through their captive design centers and services companies, however IP value does not get recognized for India. We do not have large local design companies.
Development Of Electronics Ecosystem
The Government of India has announced schemes of PLI (Production Link Incentive), semiconductor wafer fab policies for CMOS wafers, display wafers and compound semiconductors which includes ATMP / OSAT, Design Link Incentive for Fabless design companies, EMC 2.0 (Electronic Manufacturing Clusters) and last year very attractive ECMS scheme (Electronic Component Manufacturing Scheme). This was Rs. 23000 crore scheme and in 2026 budget outlay is increased to 40000 Crores.
Almost 15% of the Bill of Material of any electronic product is passive components like resistors, capacitors, inductors, transformers, relays, connectors, Cables etc. In 2030, $400 billion market passive and bare PCB which is 15% will be $60 billion market and manufacturing passives does not require large investments like Semiconductor manufacturing so many MSME can also participate.
MeitY must reduce the investment threshold and offer 25% Capex subsidy under this scheme so that large number of SME can participate in this program. All these policies have emerged as strong enabling instrument for attracting investments into the Electronic and Semiconductor industry.
SMEs should focus on following points to take advantage of this electronic industry growth.
Focus on Design led manufacturing: Only manufacturing gives very low value addition, if SME holds IP and technology for the products they manufacture, they will have better margins and also roadmap to keep them ahead in technology migration.
Get right technical mentor who can advise on the right platform as well support in design and development to reduce time-to-market.
Before developing and manufacturing any new product, do a proper market survey, talk to potential customers about their needs, see that you have some strong differentiator against competition.
Work on scaling to large volume production understanding the TAM (total available market), right BOM (bill of material) costing, right component suppliers, EMS (Electronic Manufacturing Services) partner and finally Go-to-Market strategy.
From prototype to Product is a challenge for SME, getting right Industrial design, aesthetics, certifications should be well planned.
India’s electronics decade has begun. However, growth in volume without growth in value addition will not create global leaders. SMEs must invest in design, IP ownership, component ecosystem development, and global market readiness. By embracing design-led manufacturing, India can transition from an assembly destination to a global electronics innovation hub.
About Mr. Sanjeev Keskar
Having 40+ years of working experience as India Country Head in renowned American companies in India, National Semiconductor, AMD, Freescale Semiconductor, PMC Sierra and Arrow Electronics, Mr. Sanjeev Keskar contributes impeccably to component and electronic industry.
He is also Ex Chairman of IESA (India Electronics and Semiconductor Association) and Founding President of Confederation of Indian Manufacturers in ESDM & Information Technology.
