IoT hardware manufacturing gathers momentum in India now

For years, India’s Internet of Things (IoT) deployments relied heavily on imported components and modules. Companies assembled devices locally but sourced critical parts, sensors, passive components, wireless modules, and silicon from suppliers in China, Taiwan, and other countries.

That model delivered rapid adoption but left the country exposed to supply chain shocks, currency swings, and margin pressure. Today, a confluence of policy moves, capital allocation, and industry shifts is changing that calculus and nudging IoT hardware toward more indigenous solutions.

On the demand side—which is already large and growing fast—market estimates show that India’s IoT devices market generated about USD 2.89 billion in revenue in 2024 and is forecast to expand at a strong compound annual growth rate over the decade. The scale of this demand is creating a viable domestic market for home-grown hardware suppliers, both established electronics manufacturers and a new cohort of specialised IoT module and sensor startups.

Policy Support Driving Local Manufacturing

Government policy is the visible catalyst. Production-linked incentive (PLI) schemes have been extended to telecom and networking, and most recently to passive electronics, a crucial input for IoT devices.

In March 2025, the cabinet approved a PLI package for passive components with an outlay of Rs 229.19 billion (about USD 2.68 billion), explicitly intended to boost domestic capacity for resistors, capacitors, inductors, and other components used in IoT hardware. These incentives make local production financially attractive and reduce the relative cost gap with imports.

The India Semiconductor Mission and related display and fab incentives further back this shift by offering fiscal support, in some cases up to 50% of project cost for approved semiconductor and display fabs, creating the long-term possibility of locally produced silicon for edge and connectivity chips. That kind of support is essential because chip fabs and display facilities require heavy capital and long lead times.

Reducing Import Reliance with Local Supply

The backdrop is a large import bill. Recent trade analyses put India’s telecom, electrical, and electronics imports at around USD 89.8 billion for 2023–24, underscoring the extent to which the value chain has been imported to date. Reducing that import dependency is therefore both an economic and a strategic objective: every per cent of local value-addition translates into jobs, investment, and resilience.

On the semiconductor front, practical projects are materialising. For example, a HCL-Foxconn joint venture approved in 2025 involves a planned investment of roughly Rs 37.06 billion (about USD 435 million) for a wafer facility capable of producing 20,000 wafers per month and 36 million display driver chips per year; commercial production is targeted for the mid-2020s.

Projects like this reduce reliance on foreign fabs for specific chip types used in IoT displays and controllers.

Layers of Made in India IoT Stack

In the IoT ecosystem, indigenous capability spans multiple layers. At the component level, it includes passive parts, connectors, and discrete sensors. At the module level, it extends to integrated Wi-Fi, Bluetooth, and GSM boards. The silicon layer covers microcontrollers or MCUs, power management ICs, and, increasingly, application-specific chips. At the systems layer, it encompasses domestically engineered end devices and firmware optimised for local networks and use cases.

Startups and mid-sized electronics firms are now shipping indigenously sourced sensor boards, power modules, and enclosures for solutions such as smart metering, industrial monitoring, and agricultural sensing. While earlier designs relied on imported modules, engineers are increasingly redesigning PCBs to integrate locally manufactured passive components and regionally sourced RF modules, reducing costs and shortening lead times.

Business Models Driving Localisation

Several emerging business models are accelerating the adoption of locally sourced hardware. Contract Manufacturing Organisations (CMOs) and Electronics Manufacturing Services (EMS) firms act as scale partners for product companies, while component distributors serve both CMOs and OEMs. Design-for-Manufacturability and co-engineering services are helping reduce design iterations and simplify the transition to local components without compromising performance.

Another key trend is modularisation. IoT product teams are standardising on modular radio and sensor stacks built with either imported or local parts, enabling staged substitution as local suppliers mature. This hybrid approach reduces risk while encouraging gradual localisation.

Market Challenges and Bottlenecks

Despite momentum, several constraints slow the transition. High-precision passive components and advanced analogue chips are expected to remain imported mainly in the near term, as domestic production of some categories requires specialised equipment and scale economies. The quality, consistency, and reliability testing infrastructure also needs expansion; certification labs, EMI and ESD testing, and interoperability validation are still concentrated in a few urban areas.

Working capital and access to early-stage funding for hardware startups are comparatively limited in India, making it expensive to scale manufacturing lines and invest in testing. Finally, ecosystem coordination—aligning suppliers, design houses, CMOs, and policy incentives—is complex and takes time.

Strategic Wins and Sectoral Impact

Where localisation is advancing fastest, it is delivering clear wins. Utilities and smart-metering projects benefit from local assembly and component sourcing because deployment volumes are high and device specifications are commoditised. Industrial IoT in sectors such as manufacturing and logistics offers advantages, including reduced lead times and support for bespoke firmware. In agriculture, cost-sensitive sensor nodes become more affordable when passive parts and enclosures are sourced locally.

The macroeconomic payoff is also significant. Lowering a portion of the roughly USD 90-billion electronics import bill by building domestic capacity would support export competitiveness in the medium term and create manufacturing jobs across states.

Priorities for Industry Leaders and Policymakers

To keep momentum, three priorities stand out. First, invest in downstream assembly and quality assurance infrastructure to ensure domestically produced components meet global standards. Second, align financial incentives (PLI, credit facilitation, capex support) with early-stage investments and working capital for hardware startups. Third, accelerate skills development in electronics manufacturing and testing—from technicians to firmware engineers—through focused programmes and industry-academic partnerships.

A coordinated approach that links incentives for passive components, chip packaging, fab investments, and EMS capabilities will narrow the gap between assembly and true indigenous production.

Realistic Timelines and Long-Term Gains

The shift from import dependence to indigenous IoT hardware is progressing steadily, though incrementally. Policy measures such as the PLI scheme and the India Semiconductor Mission have established a structured roadmap, while industry investments are beginning to expand domestic capacity for specific component categories.

A phased evolution is expected: over the next two to five years, India is likely to localise a greater share of passive components, PCBs, and modules. In the following five to ten years, as incentives continue and semiconductor fabrication capacity comes online, higher-value silicon and display driver chips should see meaningful domestic production.

This will not yield overnight self-sufficiency, but it will create a far more resilient and competitive IoT hardware ecosystem anchored in India.

The author is the Founder and CEO of IndieSemic.