India’s manufacturing mojo: smartphones, EVs, and deep tech redefine global ambitions

India's manufacturing sector has experienced a remarkable surge post-pandemic, with the smartphone Production Linked Incentive (PLI) scheme playing a pivotal role in this transformation. Between FY20 and FY26, smartphone production more than doubled from $30 billion to $71 billion, while exports skyrocketed tenfold to $29.4 billion. This growth was accompanied by a quadrupling of domestic value addition to 18-19%, a rapid pace compared to China's 38% over four decades, signaling a robust and deepening manufacturing ecosystem. The India Cellular and Electronics Association (ICEA) credits the PLI scheme with not only boosting exports but also fostering employment, skill development, technology transfer, and a vibrant manufacturing ecosystem, positioning India as the world's second-largest smartphone manufacturer and exporter after China, with mobile phones now constituting 21% of India's merchandise exports to the US.

Beyond smartphones, India's overall manufacturing growth rate has accelerated significantly in the post-pandemic period, rising from 3.44% during 2016-19 to 4.15% between 2022-25, surpassing the global average by nearly two percentage points. This upswing is largely attributed to proactive government initiatives such as the PLI scheme, the development of industrial corridors, and the PM Gati Shakti infrastructure program, which have collectively enhanced manufacturing competitiveness and investor confidence. According to ASSOCHAM president Nirmal K Minda, the global shift towards supply chain diversification—embracing China+1, nearshoring, and friend-shoring strategies—has repositioned India as a key beneficiary and emerging manufacturing leader, as companies now prioritize resilience alongside efficiency.

India's homegrown Electronics Manufacturing Services (EMS) sector is on a robust growth trajectory, projected to expand from ₹2.5 lakh crore in FY24 to ₹8.2 lakh crore by FY29 at a CAGR of 27%, fueled by global supply chain diversification and rising AI-driven demand. This surge is underscored by a nearly nine-fold increase in electronics exports from ₹0.4 lakh crore in FY15 to ₹3.3 lakh crore in FY25, elevating electronics to the second-largest export category by H1FY26. Key segments such as mobile phones, consumer electronics, telecom, and industrial electronics dominate over 84% of the EMS market, reflecting a diversified and maturing industrial ecosystem bolstered by sustained investments in capex, R&D, and backward integration to enhance competitiveness and margin resilience.

India is rapidly emerging as the global automotive industry's next frontier after China, driven by shifting geopolitical dynamics and a vast engineering talent pool. With China's automotive growth slowing to 3.9% in 2025 and Chinese OEMs consolidating leadership in electrification and software-defined vehicles (SDVs), global automakers are pivoting to India as an alternative growth market. Tata Technologies' Nachiket Paranjpe highlights the industry's profound transformation, where software and AI are revolutionizing vehicle development—cutting timelines nearly in half and enabling personalized, connected vehicles. Hybrid technology is also gaining traction as a pragmatic transition amid infrastructure and geopolitical concerns, signaling a balanced evolution in India's automotive ecosystem.

India's smartphone manufacturing sector has witnessed a remarkable renaissance under the Production Linked Incentive (PLI) scheme, with production more than doubling to $71 billion and exports soaring tenfold to $29.4 billion between FY20 and FY26. This rapid scale-up has quadrupled domestic value addition to 18-19%, a significant leap compared to China's gradual 38% over four decades, positioning India as the world's second-largest smartphone manufacturer and exporter. Mobile phones now constitute 21% of India's merchandise exports to the US, underscoring the sector's critical role in expanding India's industrial ecosystem and export footprint.

The Indian auto component industry is set for robust growth of 8-10% in FY27 despite persistent challenges such as labor shortages and supply chain disruptions. Manufacturers are proactively investing in automation and digitalization to mitigate workforce constraints while emphasizing localization to reduce dependency on volatile international supply chains—particularly for electric vehicle components amid geopolitical tensions like restricted access to rare earth magnets from China. Nevertheless, new free trade agreements and infrastructure developments are expected to underpin medium-term growth, reflecting a resilient and adaptive industrial ecosystem poised to capitalize on expanding sectoral opportunities.

By mid-2026, manufacturers are increasingly demanding integrated service partners who seamlessly bridge engineering innovation with operational execution to navigate systemic volatility and evolving business priorities. This shift is exemplified by the adoption of AI-driven tools such as digital twins and generative design, which enable simulation of product performance before manufacturing and accelerate R&D innovation, underscoring a move toward more holistic, innovation-centric service ecosystems, as noted by ISG director Iain Fisher.

Digital factory technologies have become foundational to the future manufacturing landscape, with advanced robotics, Industrial IoT platforms, and notably agentic AI systems projected by 2026 to autonomously reschedule production workflows and reduce changeover costs by up to 20%. This technological integration not only enhances operational efficiency but also supports resilience amid complex supply chain dynamics, reflecting a strategic embrace of automation and intelligent systems.

Enhanced OEM-supplier collaboration is now driven by sophisticated supply chain control towers and AI-powered predictive services that provide end-to-end visibility and model geopolitical and climate risks. These capabilities empower firms to execute complex nearshoring strategies and improve customer experience, addressing the heightened need for resilience in a volatile global environment.

Strategic technology and consulting services have become indispensable in guiding manufacturers through AI strategy formulation, cloud migration, and the critical task of securing the IT-OT boundary against cyber threats. This comprehensive support addresses both strategic and technical debt, enabling manufacturers to confidently integrate advanced digital solutions while safeguarding operational integrity.

Looking beyond traditional assembly and localization, industry leaders like Ather’s Swapnil Jain emphasize that India’s next wave of value creation in the mobility ecosystem hinges on developing core technologies, product architectures, and software capabilities domestically. This strategic pivot signals a maturation of India’s manufacturing services toward innovation-driven IP generation, positioning the country as a global hub for automotive technology development.

By mid-2026, industry leaders underscored that deepening localisation across the EV manufacturing value chain—extending beyond vehicle assembly to critical components like batteries, motors, and semiconductors—is vital for reducing import dependence and bolstering supply chain resilience. This push is complemented by targeted policy and financial support aimed at MSMEs, enabling them to upgrade technology and integrate into global supply chains, thereby amplifying domestic value addition within India’s burgeoning EV ecosystem.

In response to persistent geopolitical tensions and supply chain disruptions, particularly restricted access to rare earth magnets from China, the Indian auto component sector is accelerating localisation efforts and investing in automation to mitigate labour shortages and supply risks. Concurrently, industry stakeholders advocate for coordinated policy support, regulatory simplification, and innovative financing models to enhance ease of doing business and infrastructure development, positioning India as a resilient and competitive global electric mobility hub.

By mid-2026, India’s manufacturing narrative has decisively shifted from assembly-centric operations to authentic product development driven by intellectual property-led innovation. The Make in India initiative now champions genuine manufacturing over mere assembly or white labeling, with government and industry stakeholders actively discouraging misuse of the system. This maturation is underpinned by a growing ecosystem of patient capital, essential for nurturing deep tech ventures that require long development cycles before commercial viability, as highlighted by the observation that "the ecosystem that is needed... requires a lot of patient capital."

India’s deep tech startups are increasingly distinguished by their commitment to building foundational technologies from first principles rather than chasing transient trends, a strategy deemed critical for sustainable global competitiveness. This ethos is embodied by companies like Skyroot Aerospace, India’s first space tech unicorn, and Steradian, whose IP was acquired by Renesas, signaling commercial validation. As Priyanka Chopra notes, the question has evolved from whether India can create globally relevant deep tech firms to how rapidly these companies can scale internationally, leveraging emerging technologies such as AI, robotics, and clean energy to solve complex industrial challenges.

A defining feature of India’s emerging deep tech leadership is the influx of founders returning from global technology powerhouses like Google, NASA, and SpaceX, who bring invaluable international experience and a global outlook from inception. This talent migration, coupled with policy reforms—such as extending the startup definition to 20 years and opening strategic sectors like defense and space to private players—has created a more conducive environment for innovation. These changes align regulatory frameworks with the realities of hardware and deep tech development cycles, addressing previous mismatches that hindered growth.

Despite the promising ecosystem, India’s deep tech funding landscape reveals a stark contrast with the United States, where last year’s investment totaled $145 billion compared to India’s $1.6 billion. This funding gap presents a significant opportunity for global corporate investors to engage earlier in India’s deep tech journey. Complementing financial support, India’s manufacturing capabilities have evolved to aerospace-grade quality standards, enabling startups to transition rapidly from concept to production. As Vipul Vachhani emphasizes, "there is no space for a prototype prototype," underscoring the operational rigor that now differentiates India’s deep tech ecosystem on the global stage.