India’s electronics story has moved beyond PowerPoint. Phones are assembled at scale, exports have grown and factories employ people who did not previously have a path into the sector. Government deserves credit for creating momentum through production incentives and policy persistence. The problem begins when momentum is narrated as arrival. A handset assembled in India can still depend on imported high-value components, foreign intellectual property and a foreign brand that controls distribution, software and customer loyalty.
The Ministry of Electronics and Information Technology’s May 2026 achievements report records substantial cumulative production, investment and employment under its electronics incentive programmes. These are not imaginary outcomes. Critics who call the entire policy empty assembly overlook the difficulty of establishing volume manufacturing. But supporters who cite gross production as proof of technological sovereignty are equally premature.
Assembly is a rung, not an insult
I dislike the sneering way some economists use “assembly.” Every manufacturing ecosystem begins somewhere, and assembly develops logistics, quality systems, labour skills and supplier demand. It can anchor component makers and teach local managers how global production operates. The relevant question is whether policy helps firms climb from assembly toward greater domestic value, or pays them indefinitely for staying on the first rung.
The original large-scale electronics PLI offered incentives linked to incremental sales, as the official scheme description explains. That design was useful for attracting volume quickly. The next generation should use more differentiated metrics: local component sourcing, domestic research expenditure, patents that correspond to real products, supplier development, skilled employment and export competitiveness after incentives fade.
Measurement must avoid bureaucratic fantasy. A complex local-value formula can generate compliance work and creative accounting without better factories. Policy should identify a limited set of strategic components and capabilities where India can compete: enclosures, camera modules, batteries, power electronics, display subassemblies, testing equipment and eventually more semiconductor functions. Targets must reflect economics, not nationalistic wish lists.
Chinese brands still understand the buyer
Chinese smartphone brands dominate large parts of the Indian market because they solved distribution, pricing and product cadence. They built retailer relationships, flooded digital channels with comparisons and learned which specifications buyers value. Their manufacturing in India can support Indian employment, but brand power means much of the strategic control remains elsewhere. A domestic ecosystem needs firms capable of owning the customer relationship, not merely producing for it.
That does not mean excluding Chinese brands by administrative hostility. Competition has benefited Indian consumers enormously. Sudden barriers can raise prices and disrupt suppliers. India should insist on lawful operation, data protection and fair taxation while maintaining predictable rules. The goal is to make domestic firms stronger, not foreign participation arbitrary.
Local brands have to earn trust. “Indian” cannot excuse poor cameras, delayed updates or weak service. Consumers compare products, not industrial-policy speeches. Government procurement may provide early scale, but retail success requires design discipline and post-sale support. A domestic champion protected from competition will become complacent; one forced to meet global standards can become durable.
The market slowdown changes the policy test
Counterpoint Research reported a sharp decline in Indian smartphone shipments in the third quarter of 2026, with affordability particularly pressured below ₹20,000. Rising component costs and longer replacement cycles complicate the manufacturing success story. Factories built around perpetual volume growth must now operate in a market where consumers keep devices longer.
This is not entirely bad. Longer ownership can push brands toward quality, repairs and software support. But it can also squeeze entry-level buyers and reduce factory utilisation. Policy should not respond by manufacturing artificial demand through wasteful upgrade subsidies. It should support export competitiveness, component productivity and repair ecosystems. A phone maintained for four years still generates economic activity through batteries, screens and services.
The slowdown also exposes the danger of counting units without asking what they contain. High import dependence for memory, displays or chips makes local output vulnerable to global price shocks. India cannot domesticate every component, nor should it. Resilience comes from diversified supply and strategic depth, not autarky. Yet the present shock strengthens the case for building selected component capabilities where scale and policy can create advantage.
Skills must move up the line
Job counts matter, especially for workers entering formal manufacturing. Still, we should examine job quality, progression and gender. Can an assembly-line worker become a technician, supervisor or process engineer? Are women provided safe transport and pathways into technical roles? Do vocational programmes teach equipment maintenance and quality analysis rather than narrow repetitive tasks? A factory becomes developmental when capability accumulates in people.
Engineering design is the next frontier. India already supplies software and chip-design talent to global companies, but domestic product companies struggle to integrate hardware, software and industrial design. Incentives could support shared testing labs, prototyping facilities and university-industry programmes. The state should fund infrastructure and research competition, not select fashionable start-ups through opaque committees.
Supplier finance is equally important. A global anchor company can demand stringent quality and delivery while paying on schedules that strain smaller firms. Credit guarantees tied to verified contracts, common testing facilities and faster customs processes may do more for localisation than another summit. Manufacturing policy succeeds through unglamorous reductions in friction.
Publish the hard numbers
The government should publish company-level or scheme-level outcomes wherever commercial confidentiality permits: incentives disbursed, incremental sales, exports, employment and audited domestic value. Aggregate production figures are insufficient because they can rise alongside high imported content. Transparency would strengthen the government’s case and help researchers distinguish successful instruments from expensive ones.
Critics should also state their alternative. If they oppose production incentives categorically, do they accept dependence on concentrated Asian supply chains and the loss of industrial learning? Horizontal reforms—power, logistics, land, courts and skills—are essential, but they do not automatically overcome the network effects that draw electronics suppliers to established clusters. Time-limited, performance-based support can be justified when it creates capabilities that survive the subsidy.
The crucial phrase is “time-limited.” Firms must know support will taper. Otherwise lobbying replaces productivity. Schemes should include sunset reviews conducted by independent experts, with continuation based on evidence. A company missing targets should not receive a redesigned target that magically validates it.
The second phase must be harder
Make in India electronics has delivered enough to deserve continuation and enough experience to demand refinement. The first phase asked whether India could attract large-scale production. The answer is yes. The second asks whether it can retain more value, build suppliers, develop products and support brands that compete without patriotic indulgence. That is much harder.
Chinese brands will continue to dominate unless Indian firms match their understanding of price, retail and product. Policy cannot manufacture consumer affection. It can create the conditions in which domestic companies learn, scale and take risks. It can also ensure that foreign-led production transfers capability through local suppliers and workers rather than remaining an enclave.
I reject both easy stories: that PLI is merely screwdriver assembly, and that rising output proves India has become an electronics powerhouse. Assembly is a legitimate beginning. It becomes a trap only when policy mistakes motion for destination. Government now has the opportunity to convert volume into depth. If it does, today’s factories can become the base of an ecosystem. If it settles for the victory lap, India will make more phones while other countries and companies continue making most of the value.
