Policy Update
Aditya Sharma
Background
India’s electronics manufacturing sector entered a transformative phase with the launch of the Modified Electronics Manufacturing Clusters (EMC 2.0) scheme. This initiative was introduced to address long-standing infrastructure bottlenecks that limited the country’s ambition of becoming a global hub for electronics production.
India had clear advantages: a domestic market valued at $155 billion, a digital economy projected to reach $1 trillion by FY26, and a large pool of technical talent. However, heavy reliance on imports, particularly from China, left the sector exposed to strategic vulnerabilities and trade deficits exceeding $50 billion annually.
The EMC 2.0 framework, notified on April 1, 2020, was built on the original EMC scheme of October 2012, which had approved 20 Greenfield clusters and 3 Common Facility Centres (CFCs) across 15 states with a total outlay of ₹3,499 crore. The timing of EMC 2.0 proved critical, coinciding with global supply chain disruptions during the 2020–21 semiconductor shortage. With electronics production contributing only 2.3 percent of India’s GDP, the government recognized the urgency of creating a strong domestic infrastructure base.
The scheme also aligns with India’s broader policy vision, including Digital India, Make in India, and the National Policy on Electronics 2019, which aims to achieve $400 billion in domestic electronics production and strengthen India’s position in Electronics System Design and Manufacturing (ESDM). The COVID-19 pandemic further accelerated global supply chain diversification, providing India with new opportunities to attract international manufacturers.
Functioning
EMC 2.0 provides ecosystem support and infrastructure funding under two categories:
- Electronics Manufacturing Clusters (EMCs): Development of basic infrastructure in contiguous areas of a minimum extent.
- Common Facility Centres (CFCs): Upgradation of shared technical infrastructure in regions with existing ESDM units.
The scheme has a total outlay of ₹3,762.25 crore for 2020–2028, of which ₹3,725 crore is for grants-in-aid and ₹37.25 crore for administrative costs. Greenfield projects may receive up to 50 percent of project costs, capped at ₹50 crore per 100 acres, while Brownfield projects can receive up to 75 percent under the same ceiling.
Implementation involves Project Implementing Agencies (PIAs) such as state governments, public sector enterprises, industrial corridor authorities, or joint ventures with anchor units. Proposals are reviewed by the Project Management Agency and evaluated by a Project Review Committee to ensure alignment with national objectives. Applications remained open until March 2024, with fund disbursement continuing until March 2028.
Performance
The scheme has demonstrated strong traction. Five EMCs covering 1,695 acres, with a project cost of ₹2,219 crore and central grants worth ₹1,036 crore, have been approved across five states. These have attracted 392 companies with projected investments of ₹58,895 crore and the potential to create 2.63 lakh jobs.
Of these, 104 companies are already operational, contributing investments of ₹14,948 crore and employing over 67,000 people. Another 130 companies are in construction, reflecting a healthy pipeline. Infrastructure development alone has created over 1 crore man-days of employment.
A notable approval is the ₹417 crore cluster in Gautam Buddha Nagar, Uttar Pradesh, spanning 200 acres. Developed by YEIDA, it is expected to attract ₹2,500 crore in investments and generate 15,000 jobs. Its location along major expressways and near the upcoming Noida International Airport highlights the scheme’s emphasis on integrated connectivity.
Overall, nearly ₹30,000 crore has been invested under the EMC framework, bringing in over 520 companies and generating more than 86,000 jobs.
Impact
EMC 2.0 has contributed significantly to reducing import dependence and expanding domestic manufacturing. Ready-to-use facilities with plug-and-play features have lowered entry barriers for global manufacturers, MSMEs, and startups alike.
The employment effect extends beyond direct jobs to skill development across the value chain. The Electronics Manufacturing Services sector, supported by this scheme, is projected to employ 6 million people by 2025–26. Regionally distributed clusters have also expanded opportunities beyond traditional industrial hubs.
Strategically, the scheme has attracted global players seeking to diversify beyond China, aligning with complementary policies like the Production-Linked Incentive (PLI) scheme and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS).
Domestic electronics production rose from ₹1,90,366 crore in 2014–15 to ₹4,58,006 crore in 2018–19, recording a compound annual growth rate of about 25 percent. India’s global share of electronics manufacturing increased from 1.3 percent in 2012 to 3 percent in 2018.
Emerging Issues
Several challenges remain. Infrastructure gaps in power reliability, logistics, and port efficiency persist. Power outages and poor supply quality are particularly damaging for a sector that requires uninterrupted operations.
India also faces a cost disadvantage, with production expenses 10–20 percent higher than those in China, Vietnam, and Mexico. Contributing factors include higher input costs, a complex regulatory environment, and weak domestic component ecosystems.
Skilled labor shortages, particularly in advanced manufacturing processes, are another concern. Despite a strong engineering base, the transition from theoretical training to practical expertise requires sustained investment. Regulatory inconsistencies across states also complicate investment decisions.
Technology gaps in semiconductor fabrication and high-end components keep India reliant on global suppliers. Environmental challenges such as electronic waste management and the energy intensity of production add further complexity.
Way Forward
To maximize the impact of EMC 2.0, India should focus on modernizing infrastructure, improving power reliability, and strengthening logistics. Investments in smart grids, renewable energy, and port modernization will enhance competitiveness.
Building a stronger domestic component ecosystem will reduce import dependence. Integration with complementary programs such as the Electronics Component Manufacturing Scheme and SPECS 2.0, combined with innovation hubs within clusters, can accelerate technology adoption.
Competitiveness can also be improved through rationalized tariffs, streamlined regulations, and expanded cluster-based economies of scale. Single-window clearances and digital approvals will reduce compliance burdens.
Human capital development is essential. Industry-academia partnerships, specialized training centers, and programs focused on emerging technologies such as 5G, IoT, and AI will prepare the workforce for future needs.
Finally, advancing semiconductor design and next-generation manufacturing capabilities through global partnerships and R&D investment will help India move up the value chain. Embedding green manufacturing practices and circular economy models will ensure sustainable growth.
Coordinated action between central and state governments, along with integration into global trade frameworks, will help EMC 2.0 achieve its vision of making India a global electronics hub.
References
Government of India. (2020, March 20). Cabinet approves Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme. Press Information Bureau. Retrieved from https://www.pib.gov.in/PressReleasePage.aspx?PRID=1607489
Government of India. (2024). Electronic Manufacturing Clusters (EMC). Ministry of Electronics and Information Technology. Retrieved from https://www.meity.gov.in/content/electronic-manufacturing-clusters-emc-0
Government of India. (2025, June 24). ₹417 crore Electronics Manufacturing Cluster approved in Gautam Buddha Nagar, Uttar Pradesh. Press Information Bureau. Retrieved from https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2139545
Ministry of Electronics and Information Technology. (2025). EMC 2.0 – Modified Electronics Manufacturing Clusters Scheme. Retrieved from https://www.meity.gov.in/esdm/emc2.0
Parliament of India. (2024). Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme. Lok Sabha Questions. Retrieved from https://sansad.in/getFile/loksabhaquestions/annex/1714/AU1839.pdf
STMP Limited. (2025, May 14). Electronics Manufacturing in India: Growth and Job Opportunities. Retrieved from https://www.stmpl.co.in/electronics-manufacturing-india-growth-job-opportunities/
About The Contributor:
Aditya Sharma is a Research Intern at the Impact and Policy Research Institute (IMPRI) and is in the first year of his Master’s degree in Environmental Economics from the Madras School of Economics. His interest lies in analysing various programs and policies that are centered around sustainability and development.
Acknowledgement: The author extends his sincere gratitude to the IMPRI team and Ms. Aasthaba Jadeja for her invaluable guidance throughout the process
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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