India’s Ministry of Electronics and Information Technology has officially launched the portal and guidelines for the Electronics Component Manufacturing Scheme (ECMS), which offers a mix of capex-linked, turnover-linked and hybrid incentives, with a portion tied to employment creation. It has a ₹229.19 billion (approximately $ 2.75 billion) outlay over six years.

At the launch event, the Union Minister of Electronics and Information Technology, Ashwini Vaishnaw, stated that the country’s electronics production had grown five times and exports more than six times in the last few years. He added that the scheme was not just about incentives but about building design capability, achieving Six Sigma quality and becoming globally competitive.

The launch event, attended by over 200 stakeholders including global industry leaders and embassy officials, also saw Sarvam AI selected to build India’s first indigenous AI foundational model, underlining the country’s growing tech ambitions.

India’s electronics manufacturing journey started with assembling finished goods and has seen massive success in terms of mobile phone exports. This was supported by a combination of a 20% import duty and a structured production-linked incentive scheme. The same success, however, has not been replicated in IT hardware. Many experts attribute this to the absence of any import duty.

The second leg of the journey focuses on components that are brought to light by the ECMS. The target segment products are varied—non-surface mount technology components, electromechanical components, lithium-ion battery components, bare PCBs, multi-layer PCBs, high-density interconnect (HDI) PCBs and capital equipment. EE Times got some inputs from industry leaders during a live webinar organized by Indian industry body Confederation of Indian MSME in ESDM and IT to unpack this scheme and its impact.

Understanding ECMS

The ECMS offers three types of incentives—turnover-linked, capex-linked and a hybrid of both—based on the nature of the product and the segment being targeted. These incentives are spread over six years, with a one-year setup or gestation period.

“Categories A, B and C offer turnover-linked incentives. Category C also includes hybrid incentives for select products. Category D is for capital equipment and gets only capex support,” explained industry expert Sanjeev Keskar, CEO of Arvind Consultancy. For the first time ever, capital goods manufacturers are a part of the incentive framework.

Some items, like HDI PCBs and lithium-ion cells, get higher incentives, especially if key raw materials like laminates or cathode active material are sourced or made locally.

“They have incentivized backward integration. So, if you are making lithium cells and also localizing the chemistry, you get that little extra. That is smart thinking,” noted Vinod Sharma of Deki Electronics.

But this is not just a handout. The policy rewards performance—companies must meet incremental investment, turnover and employment thresholds to qualify for incentives each year.

“If you declare ₹1 billion investment, you must show at least ₹500 million in net worth or credible funding. And if your actual investment or turnover falls short by more than 50 percent, they can revoke your approval,” added Vineet Suman Darda, co-founder and managing partner at Darda Advisors LLP.

To promote job creation, part of the incentive is linked to employment—a first in Indian electronics policy. Companies failing to meet the employment target might lose up to 1% of the eligible incentive for that year. And for those wondering whether this will be misused or milked by big players, there is a cap—the maximum incentive cannot exceed 50% of the investment.

Fixing the PCB bottleneck and passive component gap

Among all the segments covered under ECMS, PCBs and passive components are widely seen as the toughest nut to crack. Not because there is no demand—India’s demand is already huge—but because raw material dependence, high entry barriers and technology gaps have held back serious investment.

“If you do not fix the raw material issue for PCBs, this segment will not grow,” Sharma said. “We spoke to 10 or 12 PCB players recently. They all had the same issue—laminates.”

So how does the policy plan to address this? “Until now, people said laminate plants are not viable because there’s not enough demand. But now, with so many new PCB plants coming in, that argument is gone,” Sharma explained.

The scheme incentivizes PCB players to buy local laminates. If the pricing is off by 2% to 4%, that gap can be closed with the incentive itself.

Passive components like resistors, capacitors and inductors face steeper challenges, largely because of technology and capital intensity, but the country is moving towards progress. Murata Manufacturing has announced a multilayer ceramic capacitor plant in Chennai—India’s first of its kind.

“These are the components we use in tens of millions every day. So, if even one big global player sets up shop, it changes the game. There are smaller players from Taiwan, Korea, China—many looking for Indian partners,” Sharma said.

The ECMS policy may be rooted in India’s domestic goals, but its success hinges on global partnerships. “This is the time to think about consolidation, acquisition, joint ventures and technology transfer. Now is the time to scale your company—with government support, capital incentives and strategic thinking,” Sharma added.

The idea is simple—if India can offer scale, demand and incentives, then companies from Taiwan, Korea, Germany and the U.S. can bring in what India lacks, like process IP, advanced tooling or automation systems.

Global standards and the path to compliance

Even as India pushes to manufacture more components at home, quality and compliance are becoming equally critical. The ECMS policy makes this clear—companies are expected not just to produce, but to meet global benchmarks, like Six Sigma standards. But raising standards also brings new challenges, especially when it comes to non-tariff barriers like Quality Control Orders or certification norms.

While some welcome these as tools to weed out subpar imports and lift domestic quality, others warn they can unintentionally hurt smaller or niche players. Many have argued that India should start adopting global standards like Underwriters Laboratories (UL) across its testing and compliance ecosystem.

“We cannot grow with low-end production. If we want to export, we need world-class compliance. That means building better testing infrastructure that is UL-compliant. We should not have to outsource our product to a different country just for certification,” Sharma elaborated.

The ECMS policy may not directly reform the standards regime, but its message is clear: make in India but make it right.

Despite these concerns, the consensus remains hopeful. Experts have agreed that India is now much more mindful of past mistakes, such as joining ITA-1 too early, which forced zero duty on key electronics components.

“We were asleep at the wheel when we signed ITA-1. Even China did not join it initially. But since then, we have learned. RCEP was stopped. ITA-2 was avoided. We are being careful now,” Sharma noted.

The vision is clear—global integration, not isolation. India is not trying to wall itself in. It is trying to build enough capability to stand tall without leaning too heavily on tariffs.

“I do not want my customers in India to pay more just because I want protection. I would rather become good enough to sell to them—and the world—at market price. That is the real goal,” Sharma concluded.

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