India’s Electronics Boom: 5 Powerful Reasons It Will Outshine China & Vietnam in 2025

India’s electronics manufacturing sector is set to gain a strong advantage as the US raises import tariffs on electronic goods from China, Vietnam, and Mexico. With tariffs as high as 54% on Vietnamese products and 34% on Chinese goods, India’s comparatively lower 27% rate makes it a more attractive destination for global companies. Smartphone manufacturing, in particular, is expected to benefit, with major players like Apple and Samsung already operating in India.

The country’s competitive edge is further supported by a large domestic market and government-backed incentives like the Production-Linked Incentive (PLI) scheme. Local firms such as Dixon Technologies are poised to become key players in the evolving supply chain. Additionally, the new Electronics Component Manufacturing Scheme (ECMS) aims to boost production of components and create nearly one lakh direct jobs. India’s electronics output has grown nearly fivefold in the past decade, while exports have surged six times, making electronics one of its top export categories.

Overall, shifting global dynamics are creating a timely growth opportunity for India’s tech hardware sector.

India’s Electronics Boom: 5 Powerful Reasons It Will Outshine China & Vietnam in 2025

A major shift in global trade dynamics is underway as the United States enforces steep tariffs on electronics imported from China, Vietnam, and Mexico. This move is expected to open up significant opportunities for India’s electronics sector, particularly in smartphone manufacturing, according to a recent report by financial services firm CLSA. With lower tariffs on Indian goods compared to its competitors, India is emerging as a cost-effective alternative for global manufacturers eyeing the lucrative US market.

US Tariffs Reshape Global Supply Chains

The US has imposed tariffs as high as 54% on electronics from Vietnam, 34% on Chinese products, and 25% on Mexican goods. In contrast, India faces a relatively modest tariff of 27%, positioning it as an appealing destination for companies aiming to reduce export costs. The US, which imports approximately $51 billion worth of smartphones annually, currently relies heavily on China and Vietnam. However, the newly imposed tariffs are prompting manufacturers to consider alternative production bases, and India’s competitive tariff structure gives it an edge as a manufacturing hub.

Smartphone Manufacturing Gains Momentum

Global tech leaders like Apple and Samsung already operate production facilities in India, mainly through in-house teams or non-listed partners. Meanwhile, Indian firms such as Dixon Technologies are set to benefit substantially from this supply chain realignment. CLSA points to Dixon’s strong infrastructure and manufacturing expertise as key strengths. As companies diversify production to navigate higher tariffs, India’s smartphone exports to the US are expected to grow steadily.

India’s Strengths: Domestic Market and Government Support

India’s vast domestic consumer base provides a strong foundation for manufacturers, reducing dependency on exports. In addition, government initiatives like the Production-Linked Incentive (PLI) scheme have accelerated local manufacturing by offering financial incentives to firms that expand production. The scheme has already attracted substantial investment in smartphone assembly, enhancing India’s profile as a global manufacturing destination.

To further strengthen the sector, the government has launched the Electronics Component Manufacturing Scheme (ECMS) worth ₹22,919 crore. This initiative targets domestic production of key components such as resistors, capacitors, printed circuit boards (PCBs), and other essential electronic parts. The ECMS is expected to attract investments of ₹59,350 crore, result in production worth ₹4.56 lakh crore, and create 1 lakh direct jobs, along with thousands of indirect jobs in logistics, retail, and support services.

Decade of Growth in Electronics

Over the past decade, India’s electronics industry has grown nearly fivefold, reaching a production value of ₹9.5 lakh crore in 2024. Export performance has been even more impressive, rising sixfold to ₹2.4 lakh crore, placing electronics among the top three export categories. The sector now supports over 25 lakh jobs, highlighting its role as a key contributor to India’s economic growth and employment generation.

Neutral Impact on Other Sectors, Big Win for Electronics

While sectors like textiles, chemicals, and agriculture may experience limited impact from the US tariffs, the electronics industry stands out as a clear winner. The high tariffs on Chinese goods—historically dominant in electronics manufacturing—create a strategic advantage for India. With lower tariffs, a skilled workforce, and robust policy support, India is well-positioned to fill the emerging gap.

Looking Ahead

India’s deliberate push to boost local manufacturing through initiatives like PLI and ECMS is beginning to show tangible results. By addressing component-level gaps and incentivizing scale, the country is reducing its import reliance and nurturing a self-reliant electronics ecosystem. For global manufacturers, India offers more than just cost savings—it provides access to a massive domestic market of over 1.4 billion people.

As global companies reevaluate their supply chains, India’s electronics industry is well-positioned to evolve into a major global tech hardware hub. This transition promises to spark innovation, drive job creation, and strengthen India’s position in the global economy. With consistent policy support and sustained investment, the sector is poised to rival traditional manufacturing giants, marking a bold new chapter in India’s industrial journey.