From Oil to Electronics: How India is Redefining Its Export Landscape

India’s export landscape is shifting from oil to electronics, driven by a 42% surge in electronics exports during the first half of FY26, reaching $22.2 billion. The government’s Production Linked Incentive (PLI) scheme has been pivotal, attracting giants like Apple and Foxconn. With iPhone exports alone contributing $10 billion, India is positioning itself as a global manufacturing hub. This transformation underscores a strategic move toward industrial growth and reduced reliance on petroleum.

For decades, India’s export economy leaned heavily on petroleum products, which powered its international trade engine. However, a significant transformation is underway: electronics exports are surging and could soon claim the position as the second-largest export category behind engineering goods. This shift not only highlights a change in trade priorities but also signals a broader evolution in India’s industrial and economic strategy.

Electronics Rise, Oil Declines

According to the Ministry of Commerce & Industry, electronics exports skyrocketed by 42% in the first half of FY26, reaching $22.2 billion compared to $15.6 billion in the same period last year. Meanwhile, petroleum exports declined by 16.4% to $30.6 billion, down from $36.6 billion. Engineering products remained dominant, with exports totaling $59.3 billion, a modest 5.3% increase year-on-year.

If this trend continues, electronics could overtake petroleum as the second-largest export category within a few years. This remarkable growth underscores an essential shift in India’s export profile, driven by deliberate policy interventions and global market dynamics.

The Catalyst: A Game-Changing Policy

This transformation traces its origins back to 2020, when the Indian government introduced the Production Linked Incentive (PLI) scheme for large-scale electronics manufacturing. The initiative provided a much-needed boost at a time when global supply chains were reeling from the pandemic and businesses were seeking alternatives to China.

The PLI scheme incentivized companies with 4–6% returns on incremental sales of locally manufactured phones and components, based on 2019–20 benchmarks. With a budget of ₹40,951 crore, the program encouraged manufacturers to ramp up production rapidly. Crucially, the incentives targeted high-value smartphones priced above ₹15,000. Global giants like Apple and Samsung quickly recognized the opportunity, turning India into a critical player in the global electronics supply chain.

By offering a credible alternative to China, India shifted its narrative from being a low-cost labor market to a reliable, long-term manufacturing hub.

Apple’s Impact on Electronics Exports

Apple has been a pivotal force in India’s electronics boom. In just the first half of FY26, iPhones worth $10 billion were exported from India, accounting for 45% of the country’s electronics exports and over three-quarters of its smartphone exports, which totaled $13.4 billion during the same period.

India is now Apple’s second-largest manufacturing base after China, with locally assembled iPhones contributing over 20% to global sales. Apple’s expansion in India aligns with the “China+1” strategy, as companies seek to diversify supply chains and mitigate geopolitical risks.

However, challenges persist, such as the recent withdrawal of skilled Chinese workers from Foxconn’s Indian facilities, underscoring lingering roadblocks in India’s climb up the electronics manufacturing ladder.

Foxconn: A Key Player in India’s Electronics Revolution

Foxconn, Apple’s largest contract manufacturer, has played a crucial role in India’s electronics success story. Starting with a single assembly unit in Tamil Nadu in 2017, the Taiwanese giant now has sprawling campuses across Tamil Nadu, Karnataka, and Uttar Pradesh.

Foxconn is investing ₹15,000 crore in Tamil Nadu, creating thousands of engineering jobs and focusing on AI-driven manufacturing and R&D. Its Karnataka facility has already begun assembling the iPhone 17, and a semiconductor plant in Uttar Pradesh is set to launch by 2027.

Such investments not only bolster India’s electronics exports but also position the country as a hub for next-generation manufacturing technologies.

The Numbers Speak

The growth of India’s electronics sector is staggering. Electronics exports have grown by 63% in just three years, from $23.5 billion in FY23 to $38.5 billion in FY25. The gap between electronics and petroleum exports, once a yawning $73.9 billion at the start of the PLI scheme, has narrowed to $24.7 billion in FY25 and is expected to shrink further to $16 billion this fiscal year.

In contrast, petroleum exports have been hit by global factors, including reduced access to discounted Russian crude oil, which had previously bolstered India’s cost advantage.

Building a Self-Reliant Ecosystem

India’s electronics transformation is underpinned by a suite of government policies designed to deepen domestic manufacturing capabilities and reduce reliance on imports.

The Electronics Components Manufacturing Scheme (ECMS), introduced earlier this year, has attracted ₹1.15 lakh crore in investment proposals, nearly double the initial target. This includes projects for producing flexible PCBs, camera sensors, and other critical components.

Additionally, programs like the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and the Electronics Manufacturing Clusters (EMC) initiative are expanding India’s industrial base beyond smartphones into medical electronics, automotive systems, and consumer devices.

India’s electronics story is no longer just about assembling smartphones. It’s about creating a robust, self-sustaining ecosystem that rivals global leaders. With initiatives like the National Policy on Electronics (NPE) 2019 and the PLI scheme, India is aiming for $500 billion in domestic electronics production by 2030–31.

Today, India has overtaken China as the top smartphone exporter to the United States and meets nearly all its domestic smartphone demand through local production. This is a stark contrast to 2014, when 78% of smartphones were imported.

As India’s electronics exports continue to surge, the sector is not just reshaping the country’s trade narrative but also driving job creation, technological advancement, and economic resilience. The transition from oil to electronics marks a defining moment in India’s journey toward becoming a global manufacturing powerhouse.