Inside the Optiemus Electronics Ltd (OEL) factory in Sector 65, Noida, a bare green printed circuit board (PCB) etched with copper pathways enters one end of a production line. As it passes through, machines deposit solder paste and place tiny electronic components on it at high speed. Next, software is loaded, connections tested, and casings fitted. Eventually, a finished Wi-Fi router emerges. The journey of that router is also a small illustration of the shift India is trying to make.
OEL, a contract manufacturer, is making the routers for TP-Link, a California-based networking-equipment company that has moved its production from China to Vietnam, Brazil and India. It began working with Optiemus last year. Besides OEL, Silvassa-based Pacific Cyber Technology (PCT) and Manesar-based Vivaan Electronic Technology are making TP-Link products in India.
“We make routers at the Optiemus factory in Noida from a bare PCB level—that is, from scratch to the finished product,” says Bijoy Alaylo, director and chief operating officer, TP-Link India.
The Optiemus plant has produced more than one million routers for TP-Link in roughly a year. This isn’t simply a screwdriver operation in which imported kits are snapped together. Component mounting, software and firmware loading, testing, final assembly and packaging take place at the facility, much of it automatically, using surface-mount technology (SMT).
Among other things, SMT features robots placing tiny electronic components on a PCB to make a finished product. Optiemus has eight fully automated SMT lines as well as 62 final product assembly, testing and packaging lines.
Optiemus, a 33-year-old company that also makes products for other global and Indian brands, is not alone. Led by the government’s Production Linked Incentive scheme (PLI), other contract manufacturers, such as Syrma SGS, Dixon Technologies, VVDN, and Sahasra Electronics, which have been operating for several years, have scaled up in recent times.
While they have proven themselves capable when it comes to assembling products, they have to raise their capabilities and learn to make more of the components that go into products such as smartphones, computers, hearables, wearables. Those components include camera modules, displays, resistors, capacitors and so on.
On a national scale, it’s a challenge that will require upgrading thousands of factories so Indian manufacturers can compete with global leaders on quality, precision, speed and cost.
A makeover for factories
Government incentives have helped turn India into a major electronics assembly base, particularly for mobile phones—55 million iPhones, accounting for 14% of Apple’s production, are assembled in India by Foxconn, Pegatron and Tata Electronics. In 2025, smartphone exports touched $30 billion, with iPhones accounting for 76% of the total, according to the ministry of commerce and analysts. The next policy push is looking to go deeper inside the device.
Under the Electronics Components Manufacturing Scheme, or ECMS, ₹69,000 crore of investment has come in, exceeding the scheme’s original investment target by ₹10,000 crore. The government has approved 106 projects, to make speakers, microphones, camera modules, displays, relays, coils, rare earth magnets and so on.
“India will emerge as a global hub for electronics, semiconductor design, electric mobility and advanced aerospace production,” says Deepak N.G., managing director, Dassault Systèmes India.
Domestic manufacturing now meets India’s requirement for some products, such as plastic enclosures, anode materials, optical transceivers and relays. Local factories meet 60% of lithium-ion-cell demand, 80% of laminate demand and 75% of connector demand.
Some components, including networking equipment, relays, LED lighting parts and automotive electronics are beginning to be exported to China, Vietnam, Singapore, Italy, The Netherlands and other countries.
But for all the gleaming new production lines, local value addition in India remains modest, at 15–18%, versus 40% in China. Critical chips continue to be imported. Printed circuit boards, sensors, and specialized materials are only beginning to be produced locally at scale. Precision components that go into earbuds, hearables, wearables, smartphones et al. depend on imports.
The manufacturing ecosystem is patchy. Partly automated, partly manual and dependent on legacy equipment.
“Some companies, like Tata Electronics, run largely automated units,” says Aditi Sharma, co-chairperson of Assocham’s National Council on Manufacturing, and chief manufacturing excellence officer at auto components maker Uno Minda. Semiconductor and advanced electronics factories, she says, have little choice but to automate.
But much of Indian industry remains in “hybrid mode”—mostly manual with some automation. Closing that gap, Sharma argues, will require manufacturers to stop treating automation as a sequence of incremental purchases. “It will not happen on a piecemeal basis. We need to put capacity ahead of demand,” she adds.
India’s attraction as a manufacturing destination has rested partly on abundant, low-cost labour, with little automation or even deployment of robots.
For instance, robots today handle component placement, precision assembly, dispensing, screw fastening, inspection, testing, packaging and material movement. Warehouses are experimenting with autonomous mobile robots and automated guided vehicles. Artificial intelligence is moving into visual inspection and predictive maintenance.
Globally, the electronics sector was the largest customer for new industrial robots in 2024. South Korea now has about 1,220 industrial robots for every 10,000 manufacturing employees.
Driven by rising labour costs and an ageing workforce, China moved up the 2025 automation rankings, issued by the Munich-based International Federation of Robots, with 166 robots per 10,000 workers. For instance, Foxconn, Xiaomi and other manufacturers in China have started using robots extensively for electronics micro-assembly (as small as a grain of salt), logistics and warehouses and some companies are moving towards fully robot-run factories.
India remains far less robot-intensive, with just around 30 robots per 10,000 employees, though that is a big leap from seven robots in 2021.
“Automation has increased significantly over the last five years,” says Pankaj Mohindroo, chairman of the India Cellular & Electronics Association (ICEA). But he estimates automation capital expenditure in much of Indian manufacturing to be below 5% of total plant and machinery investment, compared with 20% to 50% in advanced manufacturing economies.
That gap is partly a legacy problem. Installing a new automated line is one thing. Re-engineering a decades-old factory around robotics, sensors, software and data systems is another. At Deki Electronics, a Noida-based capacitor maker, managing director Vinod Sharma sees automation arriving mainly when new capacity is created.
“Nobody is retrofitting old equipment with automation. But as we are expanding capacity or setting up new capacity, the level of automation that’s already built into these capital goods is quite interesting,” adds Sharma, who is also co-chairman, information communication technology and electronics manufacturing, at the Confederation of Indian Industry (CII).
Deki is planning to deploy robots to spray metal onto capacitors. The metallisation process generates a fine spray dust. The company has to spend money on dust collectors and other safeguards for workers. A robot changes the calculation. “Nobody needs to go to that room,” Sharma says. While factories in China and elsewhere are upgrading robots with AI, factories in India are just about starting to use basic robots to do hazardous work or lift-and-shift or warehouse management tasks.
Elsewhere, the machines are becoming more capable. Hardware maker Lenovo’s automation includes robotic inspection systems using edge AI and multimodal sensors, automated guided forklifts that can load and move materials, and autonomous mobile robots that calculate routes and assist workers in warehouses.
The change over the past five years, says S.K. Venkataraghavan, director, solutions and services group, Lenovo India, is that “previously robots were largely used for fixed, repetitive tasks in controlled environments. Today, they are becoming intelligent, connected and autonomous. They are able to perceive their environment, make real-time decisions and work alongside people”.
Putting capacity before demand
That transformation needs to accelerate for India to become a global manufacturing powerhouse. “We have some 50-year-old factories and we are expecting them to become factories of the next 50 years. That thought process is our bottleneck,” says Assocham’s Sharma.
China’s advantage isn’t merely cheap components or subsidies, she argues. It is an ecosystem built around anticipating scale. “Can factories put capacity ahead of demand?” asks Sharma.
She adds, “Electronic work is very unforgiving.” A mechanical defect can often be seen, repaired or replaced. A failed sensor or semiconductor can disable several interdependent functions. For example, in a car, if the wheel-speed sensor fails, the car's Electronic Control Unit loses information, impacting electronic stability, leading to reduced safety. Components are tiny, tolerances narrow and quality failures potentially expensive.
But component makers argue that incentives for final assembly can sometimes produce adverse results. “If I know that I’m only going to be mitigated by 5% (that is the PLI cashback), then I only assemble. Why would I do more than that?” says Deki’s Vinod Sharma.
His argument is that India’s manufacturing disadvantages—cost of finance, logistics, power and lower productivity—become more painful as a company adds more value locally. A business that merely assembles imported parts has limited exposure to those costs. A company that designs the product, manufactures parts, develops software and builds an Indian supply chain incurs much higher costs.
The problem has pushed policy toward component-level incentives. Under the IT-hardware PLI, for instance, localisation can increase the incentive manufacturers receive. ECMS is intended to create suppliers for various products, including PCBs, camera and display modules, capacitors, connectors, enclosures, materials and semiconductor packaging.
For manufacturers, this is potentially the bridge between India’s assembly phase and a genuine electronics ecosystem. “The PCB guys didn’t exist earlier. But now with the ECMS coming, you will see five or six new PCB plants coming up,” adds CII’s Sharma. For instance, Gurugram-based Syrma SGS is setting up one of the largest PCB units in India in Andhra Pradesh, with trial production starting by the end of this year.
Optiemus Electronics managing director Nitesh Gupta describes India’s journey as being “between phase two and phase three”. Phase one was assembly. Phase two begins with the PCB, mounts the components, loads firmware, tests the device and completes the finished product. Phase three is localisation: making the parts that feed those production lines.
Plastics, heat sinks, shielding covers, battery packs, chargers and cables are already increasingly local. The next round includes PCBs, display modules, camera modules, passive electronic components and semiconductor packaging.
TP-Link demonstrates both how far India has come and what remains missing. Roughly 25% of the value of its products is currently sourced locally. It can build a router from a bare PCB in Noida, but many of the chips mounted on that board still have to be imported. “For chipsets we don’t have a choice. Getting them in India is very difficult,” says COO Alaylo.
The missing layer
There is another constraint, one that can’t be solved simply by constructing factories. As George Paul, director for strategy and government relations at Sahasra Group, put it, “For local value addition, the design needs to be yours.”
Sahasra operates across electronics manufacturing services and original-design manufacturing, making products such as server and desktop motherboards, solid-state drives, RFID products, printed circuit boards and semiconductor memory packages.
When a company owns the design, Paul says, it can substitute a component and test whether the revised product works. A contract manufacturer assembling somebody else’s design may not have that freedom. “If the design is not yours, it becomes difficult to get local value addition,” explains Paul.
India needs more original-design manufacturers that can convert product ideas into manufacturable designs, more domestic brands capable of creating demand and more small- and mid-sized suppliers making the subassemblies that feed large factories. For instance, in aerospace, Boeing and Airbus may sell the aircraft, but thousands of small and mid-sized companies make the seats, electronics, landing gear and engine parts.
Electronics requires the same industrial ecosystem. India’s contract manufacturers are becoming larger and more sophisticated. What is missing is the layer of companies designing products and owning technology.
A digital twin
As India tries to deepen the physical supply chain, another industrial transition is occurring simultaneously: factories are being recreated virtually.
Deepak N.G. of Dassault Systèmes India expects Indian manufacturing over the next five years to move toward “virtual twin-led engineering, software-defined production and sustainable manufacturing”. A virtual twin is like a copy of the actual physical factory, which helps companies plan better, manage breakdowns, cut costs and overall run plans efficiently.
A digital model can allow engineers to design a factory, simulate production flows and test changes before moving physical equipment. Artificial Intelligence can optimise designs. Manufacturing execution systems can track what is happening on the shop floor. Cloud platforms can connect design, suppliers and production. Virtual validation also reduces dependence on expensive physical prototypes.
Industrial software company AVEVA sees a similar shift. Rather than simply automating individual pieces of equipment, manufacturers increasingly want to connect production data, assets and workflows and use analytics or AI to spot problems before they disrupt output.
Doug Warren, senior vice president, monitoring and control business, AVEVA, says India is one of Asia’s fastest-moving automation markets. In more mature markets many manufacturers have spent years standardizing controls and operations, connecting plant systems and using real time data to drive reliability, output and quality. “India has pockets of global best practice—especially in large manufacturers and export linked supply-chains—but adoption is more uneven across the long tail,” he adds.
It requires reliable electricity, cheaper capital, logistics, skilled workers, component suppliers, testing facilities, design expertise, intellectual property and thousands of smaller manufacturers capable of producing at Six Sigma quality.
Deki’s Sharma offers a telling example of the hidden costs. His factory in Noida has a one-megawatt backup generator as grid supply is not reliable. The company spent around ₹1.4 crore on it, not counting the running and maintenance costs. “I have a capacitor business. Why should I be having to manage a generator?” asks Sharma.
The encouraging part is that the new factories being built in India generally arrive with automation already embedded. SMT machines place components at microscopic tolerances. Automated optical inspection catches defects. Manufacturing execution systems provide live production data. Automated guided vehicles move materials. AI-enabled cameras check parts that human inspectors might struggle to see.
Government programmes—the PLI schemes, Digital India, Udyog Bharat 4.0 and now ECMS—have pushed companies toward scale, components and digitisation. But while subsidies can create factories, they cannot by themselves create industrial culture.
For that, manufacturers will have to take bigger bets on capacity, invest in R&D, own more design, train workers for increasingly digital production and accept that automation is sometimes an enabler of scale rather than just a project whose return can be measured against today’s orders.
India has shown that it can assemble. The next test is whether it can manufacture deeper, faster and with enough intelligence built into its factories to compete with the world’s best production lines.