India's phone factory boom: the blueprint Sri Lanka can't ignore

Picture Credit: First Post

India has quietly engineered one of the biggest manufacturing success stories of the past decade. Once heavily reliant on imported smartphones, the country has transformed into the world's second-largest mobile phone manufacturer, with 99.2% of phones sold domestically now produced within its borders. In 2025 alone, India's smartphone exports reached an impressive US$30 billion, with Apple's iPhone accounting for roughly US$23 billion of that total.

At the heart of this transformation is India's Production Linked Incentive (PLI) scheme, launched in 2020 to encourage global manufacturers to build locally. Rather than simply offering tax breaks, the programme rewards companies based on actual production and export performance. Major players including Apple suppliers Foxconn, Tata Electronics and Pegatron have expanded operations, creating hundreds of thousands of jobs while attracting billions of dollars in foreign investment. Over the past decade, India's overall electronics production has increased nearly six-fold.

The strategy wasn't without challenges. Critics argue that the programme has required substantial government spending and that many manufacturers still rely heavily on imported components. India is also working to strengthen its domestic semiconductor and component supply chains to reduce dependence on overseas suppliers. Nevertheless, the country's ability to rapidly scale manufacturing capacity has positioned it as a viable alternative to China for global electronics production.

For Sri Lanka, India's success offers valuable lessons rather than a model to copy directly. Sri Lanka's domestic market is significantly smaller and it cannot compete on production volume alone. However, targeted incentives, stable industrial policies, efficient logistics and investment-friendly regulations could help the country diversify beyond apparel into higher-value manufacturing such as electronics assembly, precision engineering and component manufacturing.

As global companies continue to diversify their supply chains, South Asia is emerging as an increasingly attractive manufacturing hub. India's smartphone boom demonstrates that long-term industrial planning, coupled with clear investment incentives, can fundamentally reshape an economy. For Sri Lanka, the opportunity may not be to replicate India's scale, but to carve out specialised niches within the region's rapidly expanding electronics ecosystem before the next wave of investment arrives.