Electronics Industry Set to Surge Ahead of IT Services
India's electronics sector is gearing up for explosive growth over the next five years. Industry experts predict it will expand nearly three times faster than the country's larger IT services industry. Both sectors share an ambitious target: each generating $500 billion in revenue by 2030. This combined effort would push India's digital economy to the $1 trillion milestone.
Growth Trajectories and Government Vision
The electronics industry closed last year with $125 billion in revenue. It now eyes a compounded annual growth rate of 32%. In contrast, the IT services sector recorded $283 billion in revenue and projects a steadier 12% annual growth to reach the same $500 billion goal.
S Krishnan, Secretary at the Ministry of Electronics and Information Technology (Meity), provided clear perspective. "Electronics as an industry isn't larger than IT services yet," he stated in a recent interview. "Given its newer status, it remains somewhat smaller than IT and IT-enabled services. Our objective is to fuel rapid growth in both industries. By 2030, we envision India's digital economy hitting $1 trillion in revenue, with electronics and IT each contributing roughly $500 billion."
Policy Push and Manufacturing Momentum
The electronics industry gained significant momentum after April 2020. That's when the government began offering financial assistance for assembling mobile phones and other electronic goods. This support triggered a wave of expansion and new investments.
The sector now boasts over half a dozen listed firms and about a dozen private companies. Several foreign players, including Taiwanese giant Foxconn, have also entered the fray. These companies have either established new units or expanded existing facilities to assemble imported components.
Four major listed electronic component makers—Dixon Technologies, Amber Enterprises, Kaynes Technology, and Syrma SGS—reported combined revenues of $6.1 billion last fiscal year. Privately-held Tata Electronics posted even stronger numbers, ending with $7.4 billion in revenue.
India's Rising Stature in Global Supply Chains
Ankush Wadhera, Managing Director and Partner at Boston Consulting Group, highlighted India's growing appeal. "From a geopolitical standpoint, India is now among the world's most favored destinations for the global electronics supply chain," he said. "Attractive policy support and swift decision-making by both central and state governments have created recent tailwinds. Many companies are now actively discussing their India strategy. They are exploring how to diversify beyond manufacturing facilities in China, Taiwan, Malaysia, Thailand, and Vietnam."
Wadhera pointed to Meity's Electronics Components Manufacturing Scheme (ECMS) as a key driver. This initiative offers incentives for local manufacturing of electronic components. "Large global firms are likely to ramp up production in India," he added. "This should substantially increase long-term revenue. It also serves as a natural counterbalance to the potential slowdown IT services might face due to AI-led automation in the future."
Employment, Margins, and Future Challenges
Despite its rapid growth, the electronics sector still trails IT services in several areas. The IT industry employs 5.8 million people, while electronics provides jobs for 2.5 million. Salary levels also show a gap. Data reveals electronics engineers earn an average of ₹1.8 lakh per year, compared to ₹3.5 lakh in IT services.
Profit margins remain thin. Tata Electronics, despite posting ₹66,601 crore in revenue, ended with ₹69 crore in losses. Meanwhile, Tata Consultancy Services (TCS), the Tata Group's flagship IT firm, generated robust free cash flow of ₹46,450 crore.
The ECMS scheme, implemented through 2025, aims to improve this situation. By encouraging local production of phone and computer components, it should help companies like Tata Electronics, Foxconn, and Dixon move up the value chain. This shift could lead to more engineering jobs and eventually higher-paid positions.
Secretary Krishnan addressed the salary comparison directly. "We should be clear that electronics manufacturing factory jobs currently offer lower salaries compared to other tech factories with more sophisticated roles," he explained. "Those higher-value jobs will come to India too, but it will take time as the industry matures. However, it's important to understand that electronics jobs are not low-paying compared to agricultural employment. The current wages are market-clearing. Workers receive housing, proper employee protection, and opportunities that simply didn't exist before."
Industry Voices and Strategic Direction
Ajai Chowdhry, co-founder of HCL and founder of electronics industry body Epic Foundation, emphasized strategic focus. He suggested India should direct government incentives toward building local industrial champions. This approach would reduce dependency on cross-border relations and strengthen domestic capability.
"We are seeing electronics continue to grow across the board thanks to great support from the Centre in components and semiconductors," Chowdhry noted. "Electronics will also be a key employment generator. That doesn't mean software services firms are passé—they're experiencing a small blip, but we're seeing captive centers continue to uphold the sector. This should help IT grow at a steady scale alongside electronics."
The road ahead looks promising for both sectors. With targeted policies, growing global interest, and a clear vision for 2030, India's digital economy stands on the cusp of a transformative decade.
