A surprising reversal led by Apple’s ecosystem
The most striking evidence of this shift comes from Apple’s manufacturing ecosystem in India. India-based vendors supplying to Apple have exported a record $2.5 billion worth of components and sub-assemblies to China in FY26 so far, with projections suggesting this could reach $3.5 billion by the end of the year, ET reported, citing information from officials and industry executives, though Apple did not comment. This is a dramatic jump from just $920 million in FY25 and almost negligible levels before that.
What makes this development particularly significant is not just the scale but the direction of it. For years, Chinese suppliers fed India’s growing smartphone manufacturing industry. Now, Indian facilities are sending critical components such as printed circuit board assemblies, mechanical parts and specialised modules back to China. As one industry executive cited in the report said, “This upside from the PLI scheme was unthinkable when Apple first began shifting production of iPhones from China to India in 2021.”
This shift has been driven by a cluster of global and domestic manufacturers including Foxconn, Tata Electronics and others who have built capabilities in India that are now globally competitive in both cost and quality. The result is an early but clear indication that India is no longer just an assembly base but is beginning to participate deeper in global value chains.
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From assembly lines to a manufacturing ecosystem
To understand why this reversal matters, it is important to revisit the structural limitations of India’s earlier manufacturing model. For over a decade, India’s electronics growth was powered by final assembly. The Production Linked Incentive (PLI) scheme successfully attracted global companies and scaled up output, especially in mobile phones. However, this success masked a deeper vulnerability.
Most of the components, materials and sub-assemblies continued to be imported. Domestic value addition remained stuck at around 15–20 percent. This meant that while India produced large volumes, much of the value accrued elsewhere due to imported component, mainly from China. It also left manufacturers exposed to supply chain disruptions and external dependencies.
The Electronics Components Manufacturing Scheme (ECMS), launched last year, was designed to address precisely this gap. By incentivising domestic production of components, materials and manufacturing equipment, it aims to transform India from an assembly hub into a fully integrated manufacturing ecosystem. This transition is foundational. Without control over components, no country can sustain competitiveness in electronics manufacturing.
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Why components are the real game-changer
In electronics, real value lies less in final assembly and more in the components that go into a product. Items such as circuit boards, display modules, connectors, battery cells and precision materials account for a substantial share of the total value. Control over these inputs determines cost efficiency, technological capability and resilience as well as innovation.
The expansion of component manufacturing under ECMS reflects this reality. Approved projects span multiple segments, from consumer electronics to automotive and strategic sectors. By anchoring production of critical inputs within the country, India reduces its dependence on imports while also shortening supply chains.
This has multiple effects. Costs come down for domestic manufacturers. Lead times improve. And perhaps most importantly, India becomes a more attractive destination for global firms seeking to diversify production away from concentrated geographies.
Completing the missing link in industrial policy
India’s electronics ambitions rest on a three-part policy architecture. The PLI scheme created scale in finished goods. The semiconductor initiative aims to build upstream capabilities in chip fabrication and packaging. ECMS fills the critical middle layer by focusing on components and materials.
This middle layer is what allows the system to function as an ecosystem rather than a collection of isolated initiatives. Semiconductor fabs require downstream demand from component manufacturers, while assemblers depend on reliable local suppliers to increase value addition. ECMS connects these moving parts, ensuring that gains in one segment reinforce others.
The importance of this integration cannot be overstated. Without it, India risks remaining stuck in low-value assembly. With it, the country can move toward a self-sustaining manufacturing base with a high domestic value addition that captures a larger share of value.
Value addition as the true measure of progress
The ultimate test of this transformation lies in how much value is created within the country. ECMS-backed investments are expected to significantly raise domestic value addition, potentially doubling it to 35–40 percent over the next five years. This shift changes the economics of manufacturing. Higher value addition leads to better margins for firms, stronger supplier networks and greater bargaining power in global markets. It also ensures that growth in manufacturing translates more meaningfully into GDP expansion, exports and employment rather than being confined to low-value activities.
The recent export data to China is an early indicator of this shift. It shows that India is not only producing more but also producing more of it domestically.
Building skills and technological depth
Component manufacturing is inherently more complex than assembly. It requires expertise in materials science, precision engineering, process control and automation. The expansion of this segment is therefore creating a more skilled workforce and deeper technological capabilities. The projects approved under ECMS are expected to generate tens of thousands of direct jobs, many of which demand higher technical proficiency. Over time, this builds a foundation for more advanced activities such as design, testing and research and development.
As capabilities deepen, India’s role in the global electronics industry can evolve from manufacturing to innovation. This progression is essential for sustaining competitiveness in a sector that is becoming increasingly technology-intensive.
Strategic autonomy in an uncertain world
Global disruptions during Covid and after have highlighted the fragility of concentrated supply chains. Heavy reliance on imports for critical components exposes countries to geopolitical risks, logistical disruptions and price volatility. By localising production of key inputs, India is strengthening its strategic autonomy. This is particularly important in sectors such as telecom, automotive electronics and other strategic industries where supply disruptions can have wide-ranging consequences.
The ability to export components to China adds another dimension to this autonomy. It indicates that India is not just insulating itself from external shocks but also positioning itself as an alternative node in global supply chains.
The long road to a $500 billion ambition
India’s ambition to reach $500 billion in electronics production cannot be achieved through assembly alone. It requires depth, integration and sustained value creation across the supply chain. ECMS provides the policy framework to enable this transformation. By encouraging long-term investments in components and materials, it lays the foundation for a more resilient and competitive manufacturing sector.
The surge in exports to China may still be at an early stage, but it represents a powerful signal. It shows that India’s manufacturing ecosystem is beginning to mature, moving beyond assembly into higher-value activities. If sustained, this trend could fundamentally reshape India’s position in global electronics, turning it from a peripheral player into a central hub. The reversal of supply chains has begun. What was once an aspiration is now visible in trade data and on factory floors. The direction is amply clear, even if the journey has just begun.