Reduced Import Dependency in India’s Electronics Sector

Economic Survey: India aims for electronics manufacturing worth $300 bln by FY26, ET Telecom


The article reports on how major consumer electronics companies in India like Apple, Samsung, Dixon, and Havells have significantly reduced imports as a percentage of sales over the past 5 years. This signals increasing domestic production and local sourcing, likely driven by government policies.

Analysis of this news for a layman :

The article analyzes financial filings submitted by major electronics companies in India to the Registrar of Companies (RoC), a government agency. It looks at the change in the ratio of imports to total sales from the pre-COVID period (FY20) to the latest reported fiscal year (FY23).

Several technical terms are used:

  • FY – Financial year in India runs from April 1 to March 31. FY23 refers to the year April 1, 2022 to March 31, 2023.
  • Imports – Products like mobile phones, TVs, lights etc. purchased from another country.
  • Local sourcing – Purchasing components/products from a domestic manufacturer instead of imports.

The key insight is that top electronics companies have decreased reliance on imports and increased local sourcing over the past 5 years. For example, Apple’s imports were 55% of sales in FY20, but just 37% in FY23. This indicates production/sourcing from within India has gone up.

Original Analysis :

The reduced import reliance clearly results from the Indian government’s policy push towards domestic manufacturing via programs like production-linked incentives (PLIs). PLIs provide financial incentives to manufacturers for locally produced goods. The PLI schemes likely motivated players to enhance production capacities and supply chains within India to capture these incentives.

However, while imports are falling as a percentage of sales, exports still remain low or flat for most companies other than Samsung and Apple. This shows that domestic capacity is largely catering to local demand currently, rather than boosting exports.

Nevertheless, lower imports are a positive first step, as heavy reliance on imports has historically created major trade deficits for India’s electronics sector. As companies gradually boost competencies, achieve greater scale, and move up the value chain, exports can also be expected to pick up over time.

Impact on Retail Investors :

For retail investors in publicly listed stocks like Dixon, Amber, LG or Havells, this news indicates potential for sustained sales growth driven by local manufacturing. As production and sourcing shifts within India, these companies can gain market share.

However, investors need to assess if the capacity expansions required are adequately funded through internal accruals, or if significant debt/equity financing is needed. Any major financing can negatively impact short-term profit margins.

The expected long-term demand outlook remains positive due to India’s large electronics market with low penetration currently. This offers scope for multi-year growth as affordability improves.

Thus investors should adopt a long-term perspective, and utilize any price corrections due to margin pressures as opportunities to accumulate shares of companies with credible management that are enabling greater domestic value addition.

Impact on Industries :

The local electronics manufacturing ecosystem spanning multiple industries like electronics components, moldings/plastic casings, packaging materials and more clearly stand to benefit. For instance, Dixon manufactures LED bulbs, lighting products, mobile/TV assemblies etc. Its expanding production will drive procurement across multiple supply chains. This creates a multiplier effect across industries.

Companies that are currently relying extensively on imports may experience some margin pressure – for instance, those importing finished TVs or air conditioners from low-cost countries. As they transition parts of manufacturing locally, short-term profitability may be impacted before scale efficiencies kick in. We see this playing out with players like LG, Whirlpool etc. still being reliant on imports based on the financial data in the article.

The broader economy also gains tremendously. Lower electronics imports will help narrow India’s trade deficit, reduce pressure on the INR currency, and conserve foreign exchange reserves. It can also improve the current account deficit situation over time as production and value addition moves local.

Long Term Benefits & Negatives :

The long-term upside for India’s economy and domestic manufacturers is substantial if these trends sustain. Manufacturing industries could see strong job creation over the coming decade. Component suppliers will also gain as production capacities rise across sub-assemblies, PCBs, specialized ICs etc.

India’s electronics hardware production could rise from the current ~$70 billion to over $300 billion by 2025-26 based on government targets. This creates enormous scope for revenue and employment growth for associated companies. Boosted domestic output can transform India’s tech landscape.

However, most companies may take 2-3 years to attain sizable scale benefits and margin improvements after initial investments in local manufacturing. Investors need patience. Companies also need to keep enhancing design, R&D and engineering capabilities, not just manufacturing prowess.

The key risk is companies failing to achieve efficiencies, which could result in products becoming costlier for consumers. Price-sensitive Indian buyers may get drawn back to imports if domestic production lacks competitiveness. Sustained policy support and stable incentive schemes are vital.

Short Term Benefits & Negatives:

In the near term, companies rapidly expanding local production capacity may see some margin pressure as they incur initial capital expenditures and go through the learning curve. We see this in the recent results of Dixon, Havells etc. where profitability has been erratic amidst large investments.

However, they will derive offsetting benefits from saving on import duties and lower logistics costs as local sourcing increases. This provides an operating leverage for players that scale up manufacturing quickly.

For smaller component suppliers, the next 1-2 years offers great growth prospects as large OEMs (original equipment manufacturers) drive local sourcing. This will stimulate rapid capacity addition across sub-assemblies, PCB fabrication, specialized ICs etc. Recent semiconductor policies aim to propel such downstream industries too.

Consumers may face risk of higher prices for some products in the next year as costs rise faster than efficiency gains initially. Value-conscious Indian buyers could get impacted, especially for appliances and durables.

Companies will gain from this:

Among publicly listed stocks, Dixon Technologies and Amber Enterprises appear well positioned to capitalize on the government’s electronics manufacturing push.

As per the article, Dixon already derives 87% of its revenues from local production, limiting import exposure. Its diverse capabilities spanning LED bulbs, lighting products, mobile phone assemblies, consumer electronics etc. perfectly fit the target categories for self reliance.

With its credibility established, Dixon is well placed to capture a large share of the potential $300 billion Indian electronics hardware market expected by 2025-26. Its existing customer relationships with top brands provides a competitive edge that can enable it to consolidate market leadership.

Similarly, Amber Enterprises has entrenched capabilities in air conditioner components, assemblies and cooling solutions for mobiles, refrigerators etc. It already supplies to major OEMs across industries. With AC demand projected to boom and cooling solutions vital for local manufacturing, Amber Enterprises seems poised for multi-year growth.

Companies which will lose from this:

Mature MNC players like LG, Whirlpool, Bosch which are globally competitive but still rely more on imports rather than local manufacturing are vulnerable in the medium term. As the policy climate increasingly favors local sourcing, their market shares could witness steady erosion unless they rapidly scale up investments in developing domestic production and supply capacities spanning components to finished products.

For companies focused on final product assembly using imported kits, competitive pressures may intensify faster. Examples include electronics brands importing mobile phones, TVs etc from China or Vietnam and just doing the last-step assembly in India. Their import reliance and costs may go up as custom duties rise. Eventually they could lose ground to rivals with deeper local manufacturing competence.

Unless such brands quickly develop abilities across the entire value chain – from component production/procurement to final assembly, testing and quality assurance, they could struggle or lose relevance over 3-5 year horizon.

Additional Insights:

If domestic manufacturing scales as envisioned, India’s vibrant Information technology services industry can provide complementary support via hardware design, embedded software development, automated testing solutions etc. This could emerge as a new growth avenue. Sufficiency in electronics hardware also offers national security and strategic benefits by safeguarding crucial supply chains.


In summary, while the latest RoC filings reveal a promising start, much more work lies ahead to develop holistic electronics manufacturing ecosystems spanning materials, components, sub-assemblies, ancillaries etc. Sustained policy support and stable long-term incentives are vital alongside companies’ own efforts. If ‘Make in India’ succeeds, it can transform India into an electronics powerhouse.


Mukherjee, Writankar. “Top Electronic Cos’ Imports Fall in 5 Yrs on Local Play.” Economic Times of India, 27 Nov. 2023, Accessed 27 Nov. 2023.

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