Budget 2025: Electronics industry urges for simplified tariff regime, expanded PLI schemes

India’s electronics industry has been one of the fastest-growing sectors, playing a pivotal role in achieving the government's vision of becoming a $5 trillion economy. With initiatives such as Make in India, Digital India, and the Production-Linked Incentive (PLI) schemes, the sector has seen remarkable growth in recent years. As the Union Budget 2025 approaches, the industry has specific expectations to maintain momentum and overcome existing challenges.

As India’s electronics manufacturing can reach $500 billion by 2030-32, from $150billion this year, the current local value addition still stands at less than 18%. Increasing this to 40% will create extensive job opportunities and retain significant economic value domestically. For this, Ashok Chandak, president, IESA says, “The government should consider introducing additional PLI outlays linked to local value addition - strictly. PLI to be paid for minimum 25% in 2025-26 and 30 % by 2027. Should focus particularly on the mobile phone segment, which represents the largest opportunity. Enforce stricter value addition norms as a prerequisite for availing PLI benefits.” He adds that the government should consider providing $5billion of incentives for the electronics components industry for companies and joint ventures having majority holdings or stakes of Indian corporates and entrepreneurs.

Echoing the sentiment, Josh Foulger, President (Electronics), Zetwerk says, "I believe the Indian ESDM sector is poised for explosive growth, potentially mirroring the success of the Indian IT sector. While initiatives like PLI are crucial, a two-pronged approach – enhancing value addition and aggressively targeting export markets – is essential to unlock its true potential.”

ICEA, the apex body representing the electronics manufacturing ecosystem, calls for a simplified tariff regime. India’s current tariff regime is among the most complex globally, with multiple rates (0%, 2.5%, 5%, 7.5%, 10%, and 15% plus surcharges). This complexity, especially on sub-assemblies and components, impacts global competitiveness and export potential. ICEA states that the government should simplify the tariff structure into 3+1 slabs: 0% on parts/inputs and sub-parts of sub-assemblies/components, 5% on parts of certain components, 10% on sub-assemblies and components and 15% on finished goods.

The PLI schemes introduced by the government of India for electronics manufacturing, particularly for mobile phones, semiconductors, and IT hardware, have been well received by the industry. However, stakeholders are now urging the government to extend these schemes to newer product categories, such as consumer electronics, wearables, IoT devices, and more.

Over the last few years, industry opines that the budget announcements have had a positive effect on the consumer durable sector by implementing policies that promote local manufacturing, reduce taxes, and boost both rural and digital consumption. However, there is a lot more required. For instance, the industry once again urges the government to reduce GST on televisions. Pallavi Singh, senior vice president, Super Plastronics Pvt. Ltd. says, “I would like to request the finance minister to lower the GST on televisions from 28% to 18%, as TVs are not luxury items, and the current tax rate seems excessive. Most raw materials are sourced at 18%, whereas televisions and other end products are taxed at 28 %, which results in a loss of GST. It would be much easier if we could make the GST rate on finished goods equivalent to that of raw materials, thereby reducing the tax burden on manufacturers and consumers.”

She adds that there is also a need to enhance the ease of doing business at the grassroots level. “While the one-window clearance system has been introduced, businesses still face several approval processes that are time-consuming. The finance minister should prioritize enhancing consumer confidence rather than focusing on providing free incentives.”

While the government's initiatives, like the PLI schemes, have been instrumental in propelling India’s electronics and semiconductor industries, achieving a long-term, sustainable presence in the global market demands a stronger focus on fostering home-grown innovation. To truly establish India as a global leader, the government must prioritise investment in R&D to drive product creation and intellectual property development.

“Strategic investments in R&D are essential to spur innovation, enabling the development of advanced solutions that cater to evolving consumer needs. As a leader in smart wearables, we see immense potential in leveraging technologies to transform industries such as finance, and insurance, driving efficiency and convenience for consumers. Strengthening the digital payments ecosystem through increased government support for NPCI initiatives will catalyse adoption. These measures will galvanise the electronics industry and solidify India’s leadership in the global landscape,”  says Amit Khatri, co-founder, Noise.

The government should also consider allocating ₹10,000 crore specifically for targeted R&D initiatives in the Electronics System Design and Manufacturing (ESDM) sector through a public-private partnership (PPP) model, says IESA. Such funding should go beyond academic institutions and emphasise industry-collaborated R&D to ensure commercial relevance and scalability. Additionally, consolidating multiple schemes under a unified Product Creation Initiative, focused on high-priority products with global potential, would maximise impact and ensure India’s electronics industry becomes a hub of innovation and self-reliance.