Electronics Component Manufacturing Scheme (ECMS)

The Electronics Component Manufacturing Scheme (ECMS) is a Government of India scheme that gives money to companies that make electronic components in India. Components are the small parts inside a phone or laptop: circuit boards, camera modules, display units, batteries, capacitors and so on. India already assembles many phones, but it still buys most of these parts from other countries. ECMS tries to change that by helping companies build factories for the parts themselves.

Why does India need it?

Think of a mobile phone like a plate of biryani. Assembling a phone in India is like cooking the biryani here, but buying the rice, spices and meat from abroad. The final dish is "made in India", but most of the money goes to the suppliers. In electronics, the value is in the parts. If India only assembles, it earns little and depends on imports, mostly from China and other East Asian countries.

A sudden supply problem abroad can then stop Indian factories. Making components at home keeps more value, more jobs and more control inside India.

Where did it come from?

India has tried to support electronics parts for more than a decade:

1. M-SIPS (Modified Special Incentive Package Scheme), July 2012: paid back part of a company's factory cost: 20% for units in Special Economic Zones (SEZs) and 25% for units outside SEZs.
2. National Policy on Electronics (NPE), 2019: set the vision of making India a global hub for Electronics System Design and Manufacturing (ESDM), with a target of USD 400 billion turnover by 2025.
3. SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors), notified 1 April 2020: a 25% subsidy on capital spending for components, with an outlay of about ₹3,285 crore. It took applications until 31 March 2023.
4. PLI for Large-Scale Electronics Manufacturing, 2020: boosted phone assembly, but mainly the final product, not the parts.

After phone assembly grew strongly, the next gap was clearly the parts. So the Union Cabinet approved ECMS on 28 March 2025. The Ministry of Electronics and Information Technology (MeitY) notified it on 8 April 2025, with an outlay of ₹22,919 crore. The Union Budget 2026-27 raised the outlay to ₹40,000 crore because companies showed far more interest than expected.

What does it cover?

The scheme targets three layers of the electronics supply chain:

• Sub-assemblies: ready-made modules that go straight into a device, such as display modules and camera modules.
• Bare components: basic parts such as multi-layer printed circuit boards (PCBs), capacitors, resistors, connectors, and lithium-ion cells for phones and laptops.
• Supply chain and capital equipment: the raw materials used to make components, and the machines needed in component factories.

Together, sub-assemblies and bare components make up about 90% of the parts list of a mobile phone.

How does it work?

Different parts face different problems, so ECMS offers three kinds of support:

• Turnover-linked incentive: the company gets a percentage of its extra sales over a base year. This suits high-volume products like display and camera modules, where the challenge is to sell at scale.
• Capex-linked incentive: the government pays back a fixed share of the money spent on assets like plant, machinery and utilities. This suits capital equipment, where the big hurdle is the high upfront cost.
• Hybrid incentive: a mix of both. This is for complex, high-tech parts like High-Density Interconnect (HDI) PCBs, where both the setup cost and the scale-up are hard.

The scheme runs for six years, with an optional one-year gestation period (time to build the factory before targets start). The capex incentive is available for five years. A part of the incentive is linked to employment, so companies must also meet job targets to get the full reward.

What has it achieved so far?

At launch, the government expected ₹59,350 crore of investment, over ₹4.5 lakh crore of production and 91,600 direct jobs. As of November 2026:

• 118 projects have been approved across 16 states, covering 34 product types.
• Approved investment is about ₹77,051 crore, already well above the original target.
• The 106 projects approved up to August 2026 expected about ₹5.34 lakh crore of production and about 74,628 direct jobs. The 12 projects approved in November 2026 add about ₹39,045 crore of production and 7,127 direct jobs.
• As of August 2026, 38 plants had started production and 16 more were under construction.

The November 2026 round went deeper into raw materials. It covered battery materials such as cathode active material and anode material (the two main ingredients inside a lithium-ion cell), copper foil, polypropylene film and specialty ceramics. These are the materials that capacitors, PCBs and batteries are made from.

Applications received were even larger: about ₹1.15 lakh crore of proposed investment, nearly double the target.

India's position

As of 2024-25, India's electronics production was about ₹11.3 lakh crore, up from about ₹1.9 lakh crore in 2014-15. India is now the world's second-largest mobile phone maker. ECMS works alongside other schemes: the PLI Scheme (final products), the India Semiconductor Mission (chips), and EMC 2.0 (Electronics Manufacturing Clusters, which build ready industrial parks). 100% Foreign Direct Investment (FDI) is allowed in electronics manufacturing under the automatic route.

Commonly confused concepts

• ECMS vs PLI for electronics: PLI for large-scale electronics rewards the making of finished products like phones. ECMS rewards the making of the parts inside them.
• ECMS vs SPECS: SPECS (2020) gave only a 25% capex subsidy. ECMS offers turnover, capex or hybrid support, and links part of it to jobs.
• ECMS vs India Semiconductor Mission: the Semiconductor Mission supports chip making (fabs, display fabs, chip packaging). ECMS supports the other components around the chip.
• Ministry: ECMS is run by MeitY, not by DPIIT, even though DPIIT compiles overall PLI data.

Issues, criticism and the way forward

• Deep technology gap: many components need advanced know-how that only a few foreign companies have. India will need technology partnerships and joint ventures.
• Raw materials still imported: even if a part is made in India, its chemicals and materials may still come from abroad. That is why raw materials were added to later approvals.
• Cost disadvantage: Indian factories often face higher power, logistics and financing costs than rivals in China or Vietnam. Incentives cannot fix this forever.
• Fiscal cost: projected incentive payments rose well beyond the original outlay, which is why the budget was raised. Payments must be linked to real output and value addition.
• Way forward: experts suggest strong local supplier clusters, skilling for technicians, faster approvals, stable tariffs, and more research and design work in India, so that the industry can stand on its own once incentives end.

Concepts to Know

• Electronic component: a single part used inside an electronic device, such as a resistor, capacitor, circuit board or camera module.
• Printed Circuit Board (PCB): the flat green board inside a device on which all the parts are fixed and connected by thin copper lines.
• Capex (capital expenditure): money spent on long-lasting assets like buildings and machines, not on day-to-day running costs.
• Turnover: the total value of sales a company makes in a year.
• Domestic value addition: the share of a product's value that is actually created inside India. Higher is better for jobs and income.
• Global Value Chain (GVC): the chain of steps, spread across many countries, through which a product is designed, made and sold.
• Gestation period: the setup time a company gets to build its factory before its performance is measured.
• Cathode and anode: the two ends of a battery. When a battery is used, charged particles move from one end to the other. The materials that make up these two ends decide how much power a battery can store.