The easing of investment restrictions under Press Note 3 is expected to give a fresh push to India’s electronics manufacturing ambitions by enabling faster technology tie-ups and minority investments in component manufacturing.
Bridging the Component Gap
Industry executives and analysts told Fe that the changes could complement the recently launched electronics components manufacturing scheme (ECMS), which aims to deepen domestic production of components and materials used in electronic devices. The scheme has an outlay of Rs 40,000 crore and targets segments such as passive components, printed circuit boards and semiconductor supply chain materials.
Industry executives said the new PN 3 framework could ease collaborations between Indian manufacturers and global technology providers, particularly in upstream electronics manufacturing.
Ashok Chandak, president of the India Electronics and Semiconductor Association, said the move brings greater clarity for investors. “Clear rules on beneficial ownership and faster approvals will help attract technology partnerships into electronics manufacturing,” he said.
India has expanded electronics assembly rapidly over the past few years, driven by incentives such as the production-linked incentive scheme. However, the country still depends heavily on imports for key components.
Scaling Up
Analysts said the easing of investment rules alongside the ECMS signals a stronger policy focus on building a domestic component ecosystem. “India has virtually no background in electronic components manufacturing. Foreign support will be key,” analysts at JM Financial said, adding that faster approvals would help ensure that projects under the component manufacturing scheme move quickly.
Several investment proposals in the electronics ecosystem are awaiting approvals under PN 3. Among the most closely watched is a proposed joint venture between Dixon Technologies and smartphone maker Vivo, which has been under regulatory review.
Industry executives said similar partnerships could emerge in areas such as display modules, printed circuit boards, connectors and passive components as companies look to localise supply chains.
Over the past few years, regulatory changes have already pushed smartphone brands to rely more on Indian manufacturing partners. Chinese companies like Xiaomi have tied up with local manufacturers including Dixon Technologies and Optiemus for assembly and exports, while other handset makers have adopted similar models.
The latest policy tweak could accelerate this shift by making it easier for companies to bring in technology and minority capital for component production while retaining majority ownership with Indian entities.
Industry estimates suggest the domestic market for passive components, connectors and printed circuit boards is already worth over $15 billion and could expand significantly as electronics production scales up in India. Strengthening the component base is seen as critical to reducing import dependence and improving the competitiveness of the electronics manufacturing sector.