India’s electrical and electronics manufacturing sector is poised for a strategic leap, powered by the twin engines of sustainability and Industry 4.0. Under the National Manufacturing Mission (NMM), the country aims to produce electrical and electronics goods worth ₹25,673 billion by 2025–26, raising the sector’s GDP contribution from 13% to 25%.
However, this ambition is being tested by evolving global trade dynamics. Effective April 2025, the U.S. imposed a 10% baseline and a 26% reciprocal tariff on most Indian goods, threatening India’s electronics exports—valued at ₹7,696 billion in FY24. The Global Trade Research Initiative (GTRI) estimates this could lead to a 6.41% drop in electronics exports (₹493–₹1,285 billion), potentially reducing GDP by 0.4%.
To remain competitive, India must now operationalize a Green blueprint—driven by sustainability, strategic self-reliance, and technological innovation.
Navigating the Tariff Terrain with Strategic Policy Levers
India’s Union Budget 2025–26 introduced major tariff reforms, simplifying customs into eight slabs and exempting 63 critical capital goods related to EV and mobile batteries from Basic Customs Duty (BCD). This move could save 5–15% on ₹1,028 billion of FY24 component imports. At the center of India’s response is the ₹231 billion Production-Linked Incentive (PLI) scheme, which promotes local production of key sustainable components like lithium-ion cells, semiconductors, and EV motors. While U.S. tariff exemptions on smartphones, semiconductors, and clean energy (₹1,748 billion) offer some relief, India’s real defense lies in localization, digital adoption, and sustainability.
Sustainable Practices: The Heart of the Green Blueprint
India is shifting away from import-heavy production to a circular, resilient model. Nearly ₹2,948 billion in FY24 component imports could be substituted by domestic production, enabling savings of ₹181–₹290 billion (5–15%) through various green practices, viz:
- PCBs: Replacing ₹1,028 billion in imports with domestic multi-layer PCBs and reusing via IoT and AI testing could save up to ₹154 billion and cut e-waste.
- Semiconductors and Chips: Domestic fabrication under PLI targets 45% of smartphone costs (₹514 billion). Reuse and material recovery could save ₹26–₹51 billion.
- Passive Components: Localizing resistors and capacitors (₹206 billion in FY24 imports) could save ₹10–₹20 billion while strengthening supply chains.
- Display and Camera Modules: Local production could replace ₹154 billion in imports, with reuse and recycling saving up to ₹19 billion.
- Enclosures and Casings: Using eco-friendly materials could cut 10% of ₹103 billion import costs.
- Electro-Mechanical Parts: Local production of motors, switches, and connectors may reduce ₹77 billion in imports and save 7–10% in costs.
- Lithium-Ion Cells: Boosted by BCD exemptions, domestic production can reduce ₹129 billion in imports, saving 15% through reuse and recycling.
Industry 4.0: Accelerating Efficiency and Resilience
Smart manufacturing is critical to the sector’s transformation. Industry 4.0 tools – AI, IoT, and real-time tracking, in alignment with the overarching principles of NMM – have the potential to reduce energy and downtime costs by 20–30% (₹51 billion annually), increase productivity by 15–20% (₹154 billion in output), and prevent inventory stockouts, saving ₹20 billion annually.
E-Waste Management: A Pillar of Sustainability
In 2023-24, India generated approx.1.751 million metric tonnes of e-waste, a significant jump from previous years. In future, recycling and reuse are expected to save ₹5 billion annually in disposal costs. Formalizing the e-waste ecosystem (which is largely informal currently) and investing ₹100 billion in recycling infrastructure would be crucial. Modular design and tighter Extended Producer Responsibility (EPR) norms would be required to support this shift.
R&D: Fueling Innovation for Long-Term Growth
Currently, India invests just 0.7% of GDP (₹1,725 billion) in R&D – far behind countries like South Korea (4.5%). An annual R&D boost of ₹514 billion could yield a 10% productivity gain (₹2,567 billion), especially in semiconductors, sustainable materials, and battery recycling. The PLI scheme already earmarks ₹51 billion for R&D. With the right incentives, India could attract up to ₹1,028 billion in foreign R&D investments by 2030, enhancing its innovation ecosystem and improving its global rank in innovation.
Suggested Implementation Timeline: A Phased Strategy
In order to leverage the potential gains discussed above, it would be important to have a phased approach to implementation. For example, in the short term, the focus could be on relatively lower hanging fruits such as scaling domestic production by 10%, investing ₹100 billion in recycling plants, and formalizing informal e-waste handling. In the medium term, over the next 2-3 years, the focus could shift to improving logistics, trade, and MSME financing to boost output by 20%. Finally, with an eye to 2030, the focus could be on achieving the 25% GDP contribution target (₹61,614 billion of projected GDP), aided by export growth of 30%, and enhanced global competitiveness.
Conclusion: Ensuring a resilient and Green future for manufacturing
India’s green blueprint is not just a reaction to tariffs—it is a long-term strategic vision for sustainable industrial growth. By combining local production, digital technology, and environmental stewardship, India can save up to ₹290 billion, drive over ₹10,000 billion in exports, and transform the electrical and electronics sector into a global benchmark for green, competitive manufacturing. With coordinated policy execution, focused R&D investment, and Industry 4.0 integration, the sector can be put firmly on track to meet its 2030 vision, thereby redefining India’s role in the global value chain.
This article has been authored by Dr. Sanghamitra Bhattacharyya, Professor and Director – Centre of Excellence for Sustainable Development, Great Lakes Institute of Management, Gurgaon, with additional inputs from Uttam Kumar Mishra, PGPM student, Great Lakes Institute of Management, Gurgaon.
