India Makes 33 Times More Phones Than It Did 10 Years Ago — But Here Is the Uncomfortable Truth About "Made in India"

The Good News First — India's Electronics Story Is Real

Let us start with something worth celebrating.

Ten years ago, India made mobile phones worth about ₹18,900 crore a year. Today, it makes phones worth ₹6,27,000 crore — that is 33 times more. India has become the world's second-largest maker of mobile phones. Phones made in India are being exported to countries across the world. Global companies like Apple have shifted a significant part of their production to India. This is a genuine achievement. It happened because of strong government push through schemes like PLI — Production Linked Incentive — which gave companies money back on what they produced in India. Companies like Foxconn, Tata Electronics, and Pegatron all set up or expanded factories in India because of these incentives.

India is also now the largest exporter of smartphones in value terms — meaning smartphones are now India's single largest export product. That is remarkable for a country that barely made any phones a decade ago.

So the story is real. But here is where it gets complicated.

The Uncomfortable Question — How Much of That Phone Is Actually Made in India?

When you see "Made in India" on a box, what does it really mean? A smartphone is not made from one material. It has hundreds of parts: the chip that runs it, the screen that shows you images, the camera that takes your photos, the memory that stores them, the battery that powers it, and dozens of other components. Each of these parts comes from somewhere.

Right now, most of the expensive, high-value parts in a "Made in India" phone are still imported from other countries. The chip comes from Taiwan or South Korea. The display panel comes from China. The camera sensor comes from Japan. The memory chip comes from global suppliers.

What India mostly does is take all these imported parts and assemble them together. That final step — putting the parts together — happens in India. But most of the value in that phone was created somewhere else.

Think of it like making a pizza. If you buy the dough from Italy, the cheese from New Zealand, the tomatoes from Spain, and the herbs from Greece — but you bake it in your kitchen in India — can you say it is "Made in India"? You assembled it. But most of the ingredients came from elsewhere.

The fancy term for this is "Domestic Value Addition" — how much of the value of a product is actually created inside India. According to Pankaj Mohindroo, the chairman of India's biggest electronics industry body ICEA, India's domestic value addition in mobile phone manufacturing is currently about 18 to 20 percent. That means for every ₹100 worth of phone made in India, about ₹18 to ₹20 worth of work actually happens here. The remaining ₹80 to ₹82 of value comes from imported parts and components.

Compare that to China — even China, which still imports some high-value components, creates about 38 to 40 percent of the value domestically. India is roughly half of where China is today.

Why Does This Gap Matter? — The Real Value Is in the Parts, Not the Assembly

Here is why this matters for India's long-term wealth and jobs. Assembly work — putting parts together — is the lowest-value step in making an electronic product. It is also the most easily replaceable. If another country offers cheaper labour or better incentives, the assembly can move there relatively quickly.

The high-value work is in designing the chip, developing the software that runs it, manufacturing the display panel, making the camera sensor, and producing the battery cells. These activities generate more money, create more skilled jobs, and are much harder to move once established.

Think of building a house. The people who design the house — the architects and engineers — earn the most. The people who make the bricks, the windows, and the plumbing fixtures earn the next level. The people who do the final construction — putting it all together — earn the least per unit of work.

India is currently mostly doing the construction — the final assembly. The architects and component makers are still largely in other countries.

If India wants to create more wealth from electronics, it needs to move up this value chain — from assembly toward components, from components toward design, and eventually toward having Indian companies that own the intellectual property inside these devices.

What India Has Already Started Making Locally

Before we paint too bleak a picture, it is important to acknowledge what India has genuinely started making at home. Beyond final phone assembly, India now manufactures quite a few things locally:

Printed Circuit Boards (PCBs): These are the flat green boards inside every electronic device that connect all the components together. India now makes many of these locally.

Chargers and cables: The charging adapters that come with your phone are increasingly made in India.

Mechanical parts: The metal frame of your phone, the buttons, the SIM tray, the back panel — many of these physical parts are made here.

Batteries for assembly: Battery packs assembled from imported cells are increasingly made locally.

Packaging materials: All the boxes, foam inserts, and accessories that go with phones are manufactured in India.

As global phone-makers expanded into India, many of their suppliers also followed and set up local units. This is called a "supplier ecosystem" — and it is beginning to develop, even if slowly.

The government's new schemes — the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) and the Electronics Components Manufacturing Scheme (ECMS) — are specifically designed to encourage companies to make camera modules, display screens, and advanced PCBs in India. These are the next level of components India wants to localise.

Where India Is Still Far Behind — The Chips Problem

The biggest gap in India's electronics story is semiconductors — the chips. Every electronic device runs on chips. Your phone has a main processor chip, a memory chip, a display driver chip, a camera chip, a connectivity chip, and more. Chips are the brain and nervous system of modern electronics.

India currently imports almost all of its chips from other countries. This is India's single biggest electronics import dependency.

Building a semiconductor fabrication plant — the factory that actually makes chips — is extraordinarily expensive. It costs tens of billions of dollars, takes many years to build, and requires incredibly advanced technology that only a few countries in the world have mastered. Taiwan (TSMC), South Korea (Samsung), and the United States dominate chip manufacturing.

India's semiconductor mission — which got a massive boost with the recent approval of Semicon 2.0 — is trying to change this. But experts are clear: building a full chip factory from scratch takes 10 to 15 years of consistent effort.

So in the near term, India is focusing on a more achievable step: semiconductor packaging.

What Is Semiconductor Packaging — and Why India Is Focusing on It

Imagine a chip is like a very delicate, tiny brain. After it is made in a fab — the chip factory — it needs to be put into a protective case, tested to make sure it works, and connected to tiny wires that allow it to communicate with other parts of a circuit board. This process is called packaging.

Packaging does not require the same impossibly advanced technology that chip making does. A world-class packaging facility — called an OSAT, which stands for Outsourced Semiconductor Assembly and Test — can be built in two to three years at a fraction of the cost of a chip fab.

Ashok Mehta, a senior figure in India's semiconductor industry, explained it well: "Fabs take several years and tens of billions of dollars. A world-class OSAT facility can be qualified and shipping in two to three years at a fraction of that investment." India is now building its OSAT capacity. The Micron facility in Sanand, Gujarat — India's first operating semiconductor facility — is an OSAT. The HCL-Foxconn facility coming up in Uttar Pradesh is also an OSAT. This is India saying: we may not yet be able to make the chips, but we can do the next important step — package, test, and ship them. That still adds real value and builds the skills and systems needed to eventually go further.

Chip Design — India's Secret Strength

Here is something that will surprise you. Indian engineers have been designing some of the world's most advanced chips for decades — just not for Indian companies.

Engineers at Intel, Qualcomm, Apple, Nvidia, and dozens of other global chip companies working out of Bengaluru, Hyderabad, and Pune design chips that go into iPhones, Androids, gaming consoles, and data centre servers. The chip architecture, the circuits, the software — much of this design work is done by Indians. But the companies that own these chip designs are American, Taiwanese, or South Korean. The intellectual property — the knowledge that makes the chip valuable — belongs to them.

What India lacks is Indian companies designing their own chips. Companies that say: "We thought of this chip, we designed it, we own it, we sell it to the world." A few startups are beginning to do this. Mindgrove Technologies, founded by engineers from IIT Madras, is one example. Their co-founder Shashwath TR explained why this is so important: "Design and IP are where most of a chip's value sits, regardless of where it is fabricated. When Indian companies own the architecture, the software stack and the intellectual property, that value stays here."

He also said something that nicely captures India's opportunity: "Design has the lowest barriers to entry in terms of time and capital, and the highest impact in terms of both value and problem solving. It plays to our software and engineering strength." In other words: India is already excellent at software and engineering. Designing chips is a natural extension of that strength. And unlike building a chip factory — which needs tens of billions of dollars — designing chips can start with a small, talented team and a computer.

The government's DLI scheme — Design Linked Incentive — provides financial support to chip design startups. The 105 semiconductor design companies in India today are the early seeds of what could become a thriving chip design ecosystem.

The Battery Story — India Wants to Make Those Too

Electronics need batteries. Electric vehicles need batteries. Energy storage systems need batteries.

Currently, India imports the cells inside batteries — primarily from China, which dominates global battery cell manufacturing.

The government has a scheme to fix this: the Advanced Chemistry Cell PLI scheme with ₹18,100 crore committed. The target is 50 GWh of domestic battery cell manufacturing capacity.

The latest round of this scheme has been revised to make it easier for companies to qualify, and it focuses more on battery efficiency rather than just energy density. Companies that build battery cell manufacturing in India under this scheme will have a major advantage as India's EV and clean energy markets grow rapidly.

For consumer electronics — your phone battery, your laptop battery — the batteries are still mostly imported. But as India builds battery manufacturing capability for EVs, spillover into consumer electronics battery supply is expected.

Lessons From Countries That Did It Before India

The countries that dominate electronics manufacturing today — China, Taiwan, South Korea, Malaysia — did not get there overnight.

China started exactly where India is now: as a low-cost assembly hub. Over 30 years, it gradually built capability in components, then in chip packaging, then in chip design, and now in some aspects of chip manufacturing. The journey took three decades of consistent policy and investment.

Malaysia offers a slightly different lesson. Penang — a city in Malaysia — became one of the world's most important semiconductor packaging hubs not by trying to make everything at once, but by focusing deeply on one thing: packaging and testing chips. For 20 years, Penang focused on this. Global chip companies set up facilities there. A skilled workforce was built. An ecosystem of suppliers developed. Eventually, Penang became impossible to bypass for global chip supply chains. Malaysia became a global hub in semiconductors without ever building a chip fabrication plant.

The takeaway for India is clear: you don't need to do everything at once. Pick the parts of the value chain where you have a realistic advantage, build deep expertise there, attract global companies, develop local suppliers, and let the ecosystem compound over time. For India, chip design and OSAT are those entry points today. Components — cameras, displays, batteries — are the medium-term goal. And fabrication plants are the long-term ambition.

What Needs to Happen — The Three Things India Must Get Right

Industry leaders agree on three things India must do to move from assembly hub to genuine electronics powerhouse.

First — Build Indian brands and intellectual property.

Apple designed the iPhone. Samsung designed the Galaxy. These companies capture the most profit from the devices they sell because they own the design, the software, and the brand. India needs Indian companies to think and invest this way — creating their own chip designs, their own product innovations, and their own global brands.

The new Mobile Phone Manufacturing Scheme specifically offers extra incentives — an additional 3% on top of the base 5% — for companies that invest in R&D and develop their own product designs in India. This is the government's way of saying: we will pay you to become inventors, not just assemblers.

Second — Keep the policy stable for a long time.

Companies making electronics components and chips make very long-term investments. A PCB factory, a camera module plant, a packaging facility — these take 3 to 5 years to build and 10 to 15 years to pay back. If government policy changes every 2 to 3 years, companies will not take the risk. The Malaysia example shows that consistent, stable policy over decades is what builds a deep ecosystem. India needs to commit to this and mean it.

Third — Build the supply chain, not just the final product.

India's current success is in the last step — final assembly. The next goal must be to encourage the companies that make the parts for that assembly to come to India too. Camera module makers, display panel makers, memory chip packagers — all of these need to have economic reasons to set up in India.

The Electronics Components Manufacturing Scheme is designed for this. But schemes alone are not enough. Companies also need reliable electricity, good infrastructure, clear customs procedures, and a workforce trained in precision manufacturing.

The Simple Summary — Where India Is and Where It Needs to Go

India has gone from making almost no phones to being the world's second-largest phone maker in 10 years. That is a genuine achievement.

But "Made in India" still mostly means "Assembled in India." Only 18 to 20 percent of the value of a phone made here is actually created here. The chips, the screens, the camera sensors — most of the expensive ingredients still come from other countries.

India's next challenge is to change that. The government has announced the right schemes — ₹62,500 crore for mobile manufacturing, ₹1.28 lakh crore for semiconductors, and ₹18,100 crore for battery manufacturing. If companies respond to these incentives and if policy remains consistent, India has a realistic path to capturing 35 to 40 percent domestic value addition in electronics by 2035. Getting there requires Indian companies to start designing their own chips. It requires component manufacturers to set up in India. It requires investment in skills and training for precision manufacturing. And it requires patience — because the countries that dominate electronics today took 20 to 30 years to get there.

India does not have 30 years. But it does have the engineers, the policies, and now the political will.

What it needs next is consistent execution, year after year, for the next decade. That is how you go from assembling the world's phones to actually making them.