Daybreak - Make in India pushed electronics to deliver volume. Depth is still loading

Episode Date: January 19, 2026

India has become one of the world’s largest electronics manufacturers, powered by scale, assembly lines, and global contracts. But much of the design, components, and technology still sit elsewhere. In this episode, we look at why the government is now backing electronics components, what India’s EMS firms built first, and what they postponed. As India pushes deeper into the supply chain, the question shifts from volume to ownership. What does it take to move from assembling electronics to truly building them? Also, how did China get it right?Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first studio. episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. In early January, the government approved investments worth nearly 50,000 crore rupees. This money was meant for manufacturing mobile enclosures. These are the metal frames inside your phone that hold all the components together. Naturally, it's not the kind of decision that usually gets attention.

Still, this approval points to something important about how India is rethinking its electronics manufacturing. You see, over the last decade, the country has focused on building manufacturing capacity. Assembly lines have expanded quickly, smartphone production rose sharply, and global brands increased their presence in India. By 2024, India was producing 3.5% of the world's electronics and had also become the second largest manufacturer of smartphones. That growth followed a clear pattern.

Indian electronics manufacturing services companies or EMS companies organize themselves around scale. Large volumes made thin margins workable. Bigger factories helped secure global contracts. Basically, scale became the main driver of growth. Other parts of the ecosystem, though, moved slower. Design, component manufacturing, and ownership of technology remained limited. Much of the depot work stayed outside the country, even as the final assembly shifted inwards.

Joint ventures with foreign original design manufacturers played a central role during this phase. These partnerships helped Indian firms manufacture complex products and brought process discipline into local factories. They also influenced how much control or lack of control Indian companies had over-designed decisions and future product roadmaps. The electronics component manufacturing scheme is meant to respond to this imbalance. By encouraging domestic production of components like mobile enclosures, the government is trying to strengthen the middle of the supply chain and increase value addition. For manufacturers, this marks a turning point. Scale still matters.

At the same time, future growth depends on engineering capability, design depth and long-term investment in research. China's experience in this regard often comes up because its electronics ecosystem evolved differently over time. And that comparison raises a question. India's electronics industry is now facing. How far can an ecosystem built around assembly go before it needs to own the technology that it produces?

Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nickda Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that is worth understanding and worth your time. Today is Tuesday, the 20th of January. To understand why this question matters, it helps to look at how India's EMS companies have operated so far. For firms like Dixon Technologies, Tata Electronics and SIRMAS, scale became the organizing principle. In a business with thin margins, scale helped to stabilize operations.

Larger factories made it easier to handle big orders and also to manage costs. Anand Dube, the founder and CEO of Incal Technologies, described, scale as a base layer. Higher volumes allow companies to invest in research, attract skilled talent, and think about intellectual property. Without that foundation, those investments are hard to sustain. This is the thinking that shaped expansion strategies. Joint ventures or JVs became the fastest route forward. Partnerships with original design manufacturers from China, the US and Taiwan helped Indian companies move into products like smartphones and TVs. JVs such as Dixon Longchair, Bhagwati Warkin and Sairma

SGS, Shinhub, supported India's manufacturing growth. By 2024, India accounted for 3.5% of global electronics output. To understand this better, let's look at Dixon. It shows both progress and constraint. The company is expected to produce around 40 million smartphones in FY2026 and controls over half of India's mobile outsourcing market. Its annual reports show R&D or research and development spending below 1% of their revenue. Chinese contract manufacturer, Huacin technology, began in a similar position and now spends around 5% of its revenue on R&D. Amrith Acharya, the CEO of Zetwork, explained this difference through capital allocation

to my colleague Priyal Mata, a reporter at the Ken. He said where profits are reinvested reflects long-term intent. For example, factory expansion and engineering capability signal different priorities. Now, government policy too reinforced this focus on scale. India's electronics push began with the national policy on electronics in 2012, followed by an update in 2019. The 40,000-crow-rupeas PLI scheme rewarded incremental. output. Manufacturing capacity responded quickly. Mobile manufacturing units grew from two to nearly 300

in just over a decade. And this explains why among large listed EMS companies with foreign joint ventures, R&D spending ranges from just 0.2% to 0.9% of revenue. Dixon's patents are valued at around 2 crore rupees. Sirema SGS's intangible assets grew mainly through acquisitions. Among these companies, Keynes technology stands out slightly with higher R&D focused on concept exploration rather than defined product pipelines. Joint ventures or JVs transferred manufacturing discipline and quality systems. According to analysts, Sanjat Vir Koghya, control over design direction usually remained with

foreign partners. Another EMS executive described knowledge sharing as limited to current manufacturing needs. As a result, most local design work involves adapting existing products. Trachir Vardan Singh of Counterpoint Research pointed out to us that India has design engineers but lacks companies that own end-to-end product intellectual property. More on this in the next segment. Stay tuned. China's electronics industry began in a familiar place. In the late 1990s, it served as a local cost manufacturing base for global companies, including Apple. Over time, manufacturing components

and research evolved together. Industry professionals often cite speed as an early advantage. Electronics plants in China typically came up in about 18 months compared to five or six years in India. Infrastructure mattered, but ecosystem integration mattered more. When Apple, under CEO Tim Cook, moved manufacturing to Shenzhen, Chinese engineers worked closely with American teams. New designs quickly created demand for new components. Suppliers were sourced through dense local networks. And this supported collaboration and faster learning.

Over time, China produced global smartphone brands like Xiaomi, Opo and Vivo, along with firms such as Huawei and electric vehicle maker, B-YD. In fact, Huawei's journey kind of illustrates this arc. It produced its first original product in 1993 through reverse engineering and sustained R&D investment. Joint ventures with AT&T, Nokia and Intel added learning while internal capabilities expanded. Today, Huawei spends over 20% of its revenue on R&D. By 2023, China accounted for roughly a quarter of global 11. electronics exports. Also, proximity played a central role in all of this. Components, tooling, labs

and engineers were located close together, allowing problems to be solved quickly. India's early smartphone brands, including carbon, lava and micromax struggled after Chinese brands enter the market in 2015. India is now trying to build ecosystem density through its electronics manufacturing cluster scheme. Progress varies across states. Some Indian firms are experimenting with different models. Zetwork began as an engineering-led company and later expanded to EMS, which now accounts for about a 10th of its revenue. InCal developed in-house design capabilities and launched its smartphone Wobble 1 in November 2025. However, scale still remains essential for sustaining deeper R&D. But structural constraints persist. Many Indian companies lack design lineage. Geopolitics

affects technology flows. Design and manufacturing remain loosely connected with limited applied industrial labs linked to clusters. Margins also remain thin and capital costs are high. Building a smartphone brand in India still involves dependence on suppliers from China, Taiwan or Korea for key components. The electronics component manufacturing scheme addresses parts of this challenge depending on whether design and testing grow alongside production.

But efforts like Wobble and Zetwork represent attempts at indigenous value addition. But a wider transition towards a design and innovation-led ecosystem will take time and repeated experimentation. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings

and a full subscription offers daily, long-form feature stories, newsletters, and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague, Snitha Sharma, and edited by Rajiv Sien.