India's Electronics Exports Soar, But Component Gap Widens

India's electronics sector has achieved significant growth, now ranking as the country's second-largest export segment after petroleum products. Between 2015 and 2024, electronics exports experienced a compound annual growth rate (CAGR) of 17.2%, increasing from $8.6 billion to $42 billion. This segment now constitutes 10% of India's total exports and contributes 3.4% to the nation's GDP, generating approximately 25 lakh jobs.

Despite this success, the growth is predominantly driven by assembly operations, especially in mobile phones and telecom equipment, which represent over 52% of the export basket. India remains highly import-dependent for crucial components such as integrated circuits and semiconductors. While India holds a 3.5% share in global mobile phone exports, its share in integrated circuits is a mere 0.02%, despite importing $23.8 billion worth of chips in 2024.

To maintain export momentum and enhance its position in global value chains, Niti Aayog recommends a strategic shift from assembly-led expansion to component-led manufacturing. This transition requires sustained research and development, anchor investments, logistics reforms, and predictable domestic procurement policies. Addressing structural cost disadvantages and strengthening export financing are also critical for reducing the current $58.5 billion trade deficit in the electronics segment.