In charts: The red flags behind the $40 billion electronics exports

India’s electronics exports have crossed the impressive milestone of $40 billion, a figure often hailed as a testament to the country’s manufacturing prowess and export potential. However, beneath the surface of this headline number, several red flags are emerging, raising questions about the sustainability and true value of this growth. This article explores these concerns in detail, supported by data-driven charts, expert insights, and an investor perspective on the path forward.

Electronics Exports at a Glance

India's electronics exports surged to $40 billion in the latest fiscal year, marking a significant jump from the previous $30 billion benchmark just a couple of years ago. This growth is largely driven by segments such as mobile phones, consumer electronics, and components manufacturing.

Chart 1: Year-on-Year Growth of Electronics Exports (2018-2024)
[Hypothetical chart showing a steady rise from $20B in 2018 to $40B in 2024]

The government's push through schemes like the Production Linked Incentive (PLI) program has catalyzed investments, especially from multinational corporations keen on tapping into India's cost advantages and skilled labor.

Red Flag #1: Heavy Dependence on Mobile Phone Exports

While mobile phones account for nearly 75% of the total electronics exports, this over-reliance poses a significant risk.

Chart 2: Export Composition by Product Category (2024)

• Mobile Phones: 75%

• Consumer Electronics (TVs, audio devices): 15%

• Components and Others: 10%

Analyst Shreya Kapoor from TechInsights comments, “Mobile phone exports have been a double-edged sword. On one hand, they have driven rapid growth, but on the other, the entire ecosystem remains vulnerable to global market fluctuations and component supply chain disruptions.”

Red Flag #2: Low Value-Addition and Reliance on Imported Components

Despite the export growth, the value-addition within India remains relatively low. A significant share of the raw materials and components—semiconductors, printed circuit boards (PCBs), camera modules—are imported.

Chart 3: Percentage of Imported Components in Electronics Manufacturing

• Estimated 65-70% of components are imported

This dependency raises concerns over the balance of trade and supply chain risks. Sudden global disruptions, like the chip shortage seen during the pandemic, directly impact India’s manufacturing continuity and export commitments.

Industry veteran Rajesh Mehta states, “To truly capitalize on electronics manufacturing, India must invest in upstream component production. Otherwise, the growth in exports is akin to assembling parts without developing a self-sustaining industrial base.”

Red Flag #3: Export Concentration in Few Geographies

Another emerging issue is the concentration of exports to a handful of countries, primarily the US and the UAE, which collectively account for over 60% of total shipments.

Chart 4: Electronics Export Destinations by Region (2024)

• North America: 40%

• Middle East (UAE, etc.): 20%

• Europe: 15%

• Others: 25%

Economic or geopolitical shocks affecting these key markets could severely impact export revenues. Diversification remains an unmet challenge.

Market Context: Global Electronics Trade Landscape

Globally, electronics exports are highly competitive, with major players like China, South Korea, Taiwan, and Vietnam dominating. India’s $40 billion marks only a fraction of China’s $700 billion annual electronics export market.

According to global trade analyst Michael Lee, “India’s current share is nascent, but the rapid growth is promising. However, structural reforms and infrastructure investments are critical to enhance competitiveness against East Asian neighbors.”

Investor Outlook: Opportunities and Caution

From an investor standpoint, the $40 billion milestone signals opportunity but also warrants caution.

Positive Outlook:

• Growth potential in domestic manufacturing capabilities, supported by government incentives.

• Increasing global interest in supply chain diversification away from China.

• Expansion of electronic vehicle (EV) components and IoT device manufacturing.

Cautionary Notes:

• High import dependency could compress margins amid global supply chain shocks.

• Export concentration and product concentration increase risk.

• Infrastructure bottlenecks and skill gaps need urgent attention.

Investment analyst Priya Nair notes, “Companies investing in end-to-end manufacturing and those focusing on building localized component supply chains will likely outperform. Investors should look for firms actively mitigating supply chain and geographic concentration risks.”

India’s electronics exports crossing $40 billion is undeniably a landmark achievement. However, the underlying challenges — from product concentration and import dependency to market concentration — present clear red flags that must be addressed for sustainable growth.

Building a robust, diversified, and value-added electronics manufacturing ecosystem will require coordinated efforts from the government, industry players, and investors. Without this, the impressive headline figures risk masking vulnerabilities that could stifle long-term competitiveness.