So the question is: Has India indeed missed the US$ 500 billion tech manufacturing bus? More importantly: Can we still emerge as a tortoise and beat the hare to the finish line? The financial stakes and bragging rights are sky-high, given the dynamics and economics of the tech space, especially given how these could work miracles for upskilling and employment in the country.

Home to the likes of TCS, Infosys and HCL Tech, India has tamed the world in IT services, but tech manufacturing has been a non-starter. The capability and opportunities have been there, but India hasn’t managed to come good. COVID and China’s hiccups, US-China tensions and India’s low-cost muscle were fanciful rainbows, but the pot of gold has remained elusive.

Lost Opportunities And Challenges

India’s aspiration to be a technology manufacturing powerhouse has faced a variegated mix of possibilities and hurdles. COVID and subsequent US-China tensions created a window for ASEAN nations to become alternative manufacturing bases of smartphones and tech products. Vietnam, Indonesia and Thailand rode the wave. India, surprisingly, was a paddle-less laggard.

There have been gains in India, but they have been tepid. Despite the government’s Production Linked Incentive (PLI) schemes and high-profile entries like Apple’s Foxconn assembly line, India has failed to achieve transformative success. Remember, pre-COVID China controlled 70 per cent of smartphone production and component supply chains.

Countries with clear focus and appetite for business growth seized the opportunity created by China. Vietnam expanded its manufacturing ecosystem, with Samsung and others scaling operations. Indonesia and Thailand lured in major players with investor-friendly policies.

A Tale Of 'Should Have Been'

India, with its vast workforce, stable democracy and a low-hanging PLI scheme, seemed like the go-to alternative. But red tape, infrastructural gaps and indolent execution were hurdles. Arvind Subramanian, former Chief Economic Advisor, said: “India struggled with structural issues like land acquisition delays, archaic labour laws and high logistical costs.”

“Weak growth converted competitive federalism into competitive populism, with leaders outdoing each other with promises of cash transfers, free power and a slew of subsidised goods,” Subramanian added, explaining why competitiveness has become less salient.

Brookings India agrees, adding that for reasons that include technology, diplomacy and military, India needs to move up the technology value chain. “India clearly needs to localise and liberalise. The approach should be to do things domestically. If this means changing policies to liberalise, India should do it.”

The government’s PLI scheme, launched in April 2020, is designed to boost local technology manufacturing, and offers financial incentives based on incremental sales. Apple suppliers like Foxconn, Wistron and Pegatron began assembling iPhones in India after PLI was unveiled, marking significant wins. Yet, this success did not become a precursor to a broader trend.

Still Low In The Value Chain

Techie Neil Shah of Counterpoint Research says while companies are assembling in India, high-value components are being imported. “The lack of an indigenous semiconductor ecosystem and raw material supply chains force India to be an assembler, not a manufacturer. Vietnam, on the other hand, has been working for decades to integrate its supply chains,” he explains.

Also, the PLI schemes carry in their wake a whiplash, often being seen as tools to favour large, established, domestic players, ignoring the smaller manufacturers who can build a dependable supply ecosystem. Thus, even companies like Intel, which can transform the manufacturing landscape, are not making large commitments in India, partly due to infrastructural bottlenecks.

Telecom infrastructure equipment also presents an opportunity, as 5G FWA (Fixed Wireless Access) is the only way to take connectivity downstream and into rural areas in India. “Jio is looking to bank on its ready network, but Vi and BSNL are stragglers in the fixed broadband space. That is a market opportunity for manufacturing,” says Varun Gupta of Counterpoint.

Long Walk Ahead

Present and projected market potential are significant, making India’s sluggishness in tapping this opportunity all the more puzzling. The global tech manufacturing sector touched US$ 115 billion in 2024, with India emerging as the world’s fourth-largest smartphone supplier. The Indian government plans to expand this sector to US$ 500 billion by 2030, in a bid to emerge as a global manufacturing hub.

Domestic demand for tech and electronics goods is also surging, as standards of living and aspirational purchases rise, prodding PwC India to project an increase to US$ 21.18 billion by 2025. “There is further opportunity, for this market presents opportunities to enhance manufacturing capabilities and reduce reliance on imports,” PwC said.

To emulate the success of software services and BPM (Business Process Management), India needs move up the tech manufacturing value chain and elevate its position. This can be done by learning and producing components such as PCBs (Printed Circuit Boards), semiconductors and advanced electronic systems.

The challenges are technology transfer (with firms like Intel still studying India’s capabilities and long-term intent) and the lack of a skilled workforce (because very few have worked in this space). These issues hold the key to capitalise on India’s manufacturing potential and achieve the heady growth targets that have been announced.

Bottlenecks Keeping Away Tech Giants

As stated, there are bottlenecks and constraints keeping global giants wary. For one, despite strides in the World Bank’s ‘Ease of Doing Business’ rankings, procedural delays and state-level variations deter investors looking to consider India.

Infrastructural humps are also cramping rollouts. Ports, roads and power supply — critical for manufacturing — are underdeveloped, compared to South-East Asian competitors. Logistic costs are 14 per cent of GDP, compared to 8-10 per cent in China.

That brings us to ‘skill’ and ‘policy’. India boasts a young workforce, but the expertise required for advanced electronics manufacturing remains inadequate. Frequent shifts in tax regimes and regulatory frameworks also make India less predictable for long-term investments, contrasting with other nation’s consistent investor-friendly policies.

Beyond these challenges, though, India retains significant opportunities. The government’s US$ 10 billion semiconductor incentive scheme could attract players like TSMC and Samsung. Executed smartly, India could reduce its reliance on imported chips and get closer to building an integrated tech manufacturing ecosystem.

Winners, Losers, Fence-Sitters

With the world diversifying from China, India has the chance to emerge as a complementary hub. Top global firms need reliable facilities for smartphones, laptops, wearables and automotive electronics. Add to this India’s massive, captive consumer base for smartphones and others gadgets, and it offers a unique dual advantage. Companies like Xiaomi and Oppo have established assembly operations in India largely to cater to rising domestic demand.

For Apple, India accounts for a growing share of iPhone production, with the Foxconn and Pegatron units going online. Samsung is running the world’s largest mobile manufacturing facility in Noida (Delhi-NCR). There are those who are hesitant to enter too, such as Intel, which is evaluating India’s semiconductor ecosystem, and Tesla, which appears to be walking the fence due to high import tariffs and unclear EV policies.

India hasn’t missed the tech manufacturing ship entirely, but it is certainly lagging behind. A massive workforce, rising consumer base and government incentives give India advantages. Yet, bureaucratic inertia, skill gaps and infrastructural inadequacies prevent it from becoming a true alternative to China.

What is needed is for India to exhibit visible urgency and clarity in execution. Especially now, when the global gadgetship is sailing faster than India can row. The trick lies not in intent or volume, but in execution and finesse.

(The writer is a veteran journalist and communications specialist. Views are personal)