Cabinet Approves ₹22,919 Crore Scheme for Electronic Components Manufacturing

In a significant move to boost India's electronics manufacturing sector, the Union Cabinet has approved a ₹22,919 crore incentive scheme for electronic components production. The six-year program aims to strengthen India's position in global value chains while increasing domestic value addition in the rapidly growing electronics sector.

Key Objectives and Economic Impact

The newly approved scheme is designed to catalyze substantial growth in the electronics manufacturing ecosystem. According to government projections, the initiative is expected to generate:

• Production worth ₹4.56 lakh crore
• Incremental investment of ₹59,350 crore
• Creation of 91,600 direct jobs

A distinctive feature of this scheme is that participating companies' yearly subsidies will be directly linked to the number of jobs they create, alongside capital expenditure needs and annual production metrics.

Target Components and Applications

The government has identified several critical electronic components to be manufactured under this scheme, including:

• Display modules
• Sub-assembly camera modules
• Printed circuit board assemblies
• Lithium cell enclosures
• Resistors and capacitors
• Ferrites

These components are essential for a wide range of consumer electronics and home appliances, from smartphones and laptops to refrigerators, microwave ovens, and toasters.

Strategic Shift from Import Substitution to Export Promotion

Union IT Minister Ashwini Vaishnaw emphasized a significant shift in the approach to electronics manufacturing, stating: "We need to come out of the import substitution mindset and go forward with export-led promotion. Viability comes after large-scale manufacturing."

The Minister noted that electronics manufacturing in India currently stands at approximately $120 billion, with ambitious plans to expand to $500 billion in the coming years. This remarkable growth target underscores the government's commitment to making electronics a cornerstone of India's economic development strategy.

Addressing the Components Gap

Despite the success of earlier Production Linked Incentive (PLI) schemes in attracting global giants like Apple and Samsung to establish assembly operations in India, domestic value addition has remained relatively low at 15-20%. The government aims to increase this to 30-40% through the new components scheme.

An internal assessment by the IT Ministry identified a massive demand-supply gap in the electronic components sector:

• Gap of $100 billion for domestic consumption alone
• Potential gap of $140 billion if India pursues component exports
• Current domestic production capacity of just $10.75 billion (2022-23)

Electronics currently ranks as India's second-largest import commodity after oil, accounting for nearly 75% of the total electronics production in the country. This high import dependency highlights the critical need for developing robust domestic manufacturing capabilities.

Key Challenges in Components Manufacturing

The government has identified three major challenges that need to be addressed to build a successful electronic components ecosystem in India:

• Lack of domestic scale - Current production volumes are insufficient to achieve cost competitiveness
• High investment-to-turnover ratio - While smartphone manufacturing yields approximately ₹20 for every rupee invested, component manufacturing typically generates only ₹2-4 per rupee invested
• Growing import dependency - Component imports are increasing at around 12% annually, requiring domestic production to grow at a CAGR of more than 53% to meet projected demand of $160 billion by 2028-29

Complementary Measures to Support Growth

To further bolster the electronics manufacturing ecosystem, the IT Ministry is coordinating with other government departments on several fronts:

• Discussions with the Labour Ministry on sector-specific labor reforms
• Working with the Commerce Ministry to resolve classification issues for components
• Engaging with the Finance Ministry on rationalizing import duties

While the PLI scheme for smartphones has successfully reduced imports of finished products, imports of key components and sub-assemblies have continued to rise, increasing from $29 billion in FY21 to $46.5 billion in FY23. The new components scheme aims to address this growing dependency on imports.

With electronics already among India's three largest exported commodities (valued at ₹2.5 lakh crore), the government expects this figure to double within the next four years, demonstrating the sector's immense growth potential.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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BYD's India Manufacturing Plant: Reshaping India's EV Landscape

Chinese electric vehicle giant BYD is preparing to establish its first manufacturing facility in India, potentially transforming the country's rapidly evolving EV sector. The company has selected Rangareddy district in Telangana, approximately 60 kilometers from Hyderabad, as the location for its proposed electric vehicle and battery production unit.

Strategic Timing of BYD's India Expansion

BYD's entry into the Indian market comes at a strategic moment, driven primarily by mounting trade barriers in Western markets. The European Union has imposed tariffs up to 35.3% on Chinese EVs since late 2024, with BYD specifically facing a 17% levy on top of the standard 10% import duty.

Similarly, the United States has dramatically increased tariffs on Chinese electric vehicles from 25% to 100%, effectively closing that market to BYD's expansion plans. These protectionist measures have prompted the company to pivot toward emerging economies with growing EV potential.

India, with its relatively lower tariffs and government-backed EV incentives through programs like the FAME scheme, presents an attractive alternative market. Reports indicate that BYD has received informal approval from Indian authorities to proceed with the project, provided it partners with a local entity. Hyderabad-based Megha Engineering and Infrastructures Ltd (MEIL) is expected to be the majority stakeholder in this venture.

BYD: From Battery Manufacturer to Global EV Leader

Founded in 1995 by Wang Chuanfu, BYD began as a battery manufacturer before expanding into automotive production in 2003. Over the past two decades, it has risen to become the world's leading EV manufacturer, surpassing Tesla in total vehicle sales.

The company's technological innovations include the Blade Battery, a lithium iron phosphate (LFP) battery with exceptional safety features and energy efficiency. BYD maintains a vertically integrated supply chain, reducing dependence on external suppliers and achieving significant cost advantages.

BYD's Technological Edge

BYD's Blade Battery technology represents a significant advancement in EV safety and efficiency. During rigorous testing, the battery demonstrated remarkable thermal stability by maintaining surface temperatures of only 30-60°C during nail penetration tests, compared to conventional batteries that reached dangerous temperatures of 200-400°C or even ignited.

The company's charging technology is equally impressive. BYD's Super e-Platform enables vehicles to gain 470 kilometers of range in just five minutes of charging, substantially outperforming competitors. With peak charging capabilities reaching 1,000 kilowatts, BYD is effectively addressing one of the primary consumer concerns about electric vehicles.

In comparison, the fastest charging electric passenger vehicle currently available in India, the Tata Curvv EV, requires 40 minutes to charge from 10% to 80% using a DC fast charger.

BYD's Position in the Global EV Market

BYD has firmly established itself as a dominant force in the global electric vehicle market. In 2024, the company reported:

• Annual revenues exceeding $107 billion
• Delivery of 4.27 million vehicles worldwide
• Nearly double Tesla's 1.79 million units
• A 32% market share in China's new energy vehicle sector
• International exports accounting for approximately 10% of total shipments

The company has already established production facilities in Thailand, Brazil, and Hungary, with India now becoming its next manufacturing hub.

India's Growing EV Market

While India's EV market is still developing, accounting for only 2.5% of total passenger vehicle sales in 2024, it shows tremendous growth potential. The sector is projected to expand at a compound annual growth rate (CAGR) of 43%, with sales estimated to reach 932,000 units by 2030.

Electric SUVs are expected to dominate this growth, representing approximately 61% of total EV demand. The Indian government has set an ambitious target for EVs to constitute 30% of passenger vehicle sales by FY30.

Production data reveals significant momentum in local EV manufacturing. India produced 125,500 EV passenger vehicles in 2024, a 22.5% year-on-year increase. Projections indicate a dramatic 140.2% rise in 2025, with an estimated 301,400 units representing about 6% of the country's total projected passenger vehicle production.

Current Leaders in India's EV Market

The Indian electric vehicle market is currently dominated by several key players:

• Tata Motors holds approximately 38% market share
• MG Motor India has captured about 29% of the segment
• Mahindra Electric maintains around 16% market share

Tesla has also announced plans to enter the Indian market, setting the stage for intense competition among global EV manufacturers.

The BYD-Tesla Rivalry Expands to India

The competition between BYD and Tesla has been a defining element of the global EV landscape. BYD surpassed Tesla in quarterly global sales for the first time in late 2023, and the gap has continued to widen. In 2024, while Tesla's deliveries dropped 1.1% to 1.79 million vehicles, BYD's surged 29% to 4.27 million units.

Tesla's market share in China has declined precipitously, from over 16% in 2022 to just 4.3% by early 2025. Whether BYD can replicate this success in India remains to be seen, especially as Tesla prepares to launch its operations in the country.

Impact on India's Automotive Landscape

BYD's entry into the Indian market is expected to significantly reshape the competitive landscape. The company's arrival will likely accelerate several industry trends:

• Increased price competition in the EV segment
• Accelerated technological advancement in battery and charging systems
• Expanded demand for EV components and manufacturing capabilities
• Greater investment in charging infrastructure

Industry experts anticipate that BYD's investment will boost consumer adoption of EVs in India. However, the company's success will depend on various factors including regulatory approvals, infrastructure development, pricing strategy, and competition from both global and local manufacturers.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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