5 September 2026
Most "Made in India" smartphones are still foreign parts assembled locally, but that is how every global manufacturing giant began.
Prime Minister Narendra Modi recently celebrated that "Made in India" smartphones are reaching every corner of the world, highlighting India's rise from importing 80% of its phones in 2014 to becoming the world's second-largest manufacturer. Yet underneath the label, industry data shows that Indian factories contribute only 15% to 20% of each phone's actual value. The costliest core components-advanced processor chips, memory, camera sensors, and display screens, which together account for roughly 80% of the device's bill-are still imported from China, South Korea, and Taiwan because India cannot yet manufacture them. Today, Indian plants primarily handle surface-mount assembly, soldering imported chips onto circuit boards, installing locally packaged batteries, chargers, and plastic casings, and boxing the finished devices. This has created a trade paradox: while imports of fully built phones have dropped to zero, imports of unassembled electronic components have surged into tens of billions of dollars, leaving net foreign earnings surprisingly thin. Economists, including former RBI Governor Raghuram Rajan, have warned that the government's Production-Linked Incentive (PLI) scheme uses billions in taxpayer-funded subsidies (4% to 6% on sales) largely to package foreign parts without an established local parts ecosystem. However, global history shows that industrial powerhouses like China, Taiwan, and South Korea started the exact same way-using low-cost assembly to build massive production volume before global component makers agreed to set up local factories. In India, this boom has already generated hundreds of thousands of formal factory jobs for young technicians and women, while raising domestic value addition from barely 3% a decade ago to nearly 20% today. With multi-billion-dollar semiconductor fabrication and testing facilities now under construction in Gujarat and Assam, India is attempting to master the hardest high-tech steps needed to turn foreign assembly into true domestic manufacturing.