How to start an electronic manufacturing business in India

A lucrative option for people with technical skills and knowledge, electronics manufacturing businesses are easy to start, particularly in a country like India.

The Indian electrical industry is booming and has witnessed consistent growth in the last few years. The domestic market, valued at $48-50 billion in 2021, is expected to grow at a CAGR of 11 to 12 percent to reach around $72 billion by 2025. Furthermore, the value of exports from India is predicted to grow from $8.62 billion to $13 billion.¹

This growth creates endless opportunities for people wanting to enter this exciting career path. That being said, the following guide will walk you through everything you need to know to start an electronic product manufacturing business in India.

Electronic manufacturing in India

The Indian electronics industry comprises two broad segments — generation equipment with transmission & distribution (T&D), and allied equipment. The sector contributes to approximately 8% of the manufacturing sector.²

When it comes to electronic products, India particularly stands out as the second-largest mobile phone producer in the world. Mobile phone exports from the country grew from $0.2 bn in 2017-18 to $1.7 bn in 2021. Similarly, engineering goods constitute over 27% of India's total export sector.

The Indian government is on a mission to make the country a preferred destination for electronics goods manufacturing. It aims to achieve an output of $100 bn by bridging the trade deficit in the sector, meaning Indian manufacturers are becoming more competitive in product designs, manufacturing, and testing facilities. Additionally, further growth will be fueled thanks to the rapid increase in infrastructure investments and industrial production.

Why start an electronic manufacturing business in India?

The reasons for starting an electronic manufacturing business in India are numerous. A lucrative industry, electronic manufacturing companies' profitability stems from factors including the widespread use and increasing demand for electronic devices, the low production costs compared to other countries, and the subsequent high-profit margins. Additionally, reasons like lower capital investment requirements, the ability to manage and get involved in every aspect of the business processes, and a steady income every month are encouraging people to start an electronic business in India.

While it does take a considerable amount of money to kickstart your electronic manufacturing business, you can cut down on many costs, including those associated with setting up a physical store, by selling on a wholesale platform like Alibaba.com. It can also serve as an extra income channel for those who know how to design and manufacture electronic devices.

The electronic manufacturing industry in India is highly fragmented. As a result, you can choose from a wide array of products to manufacture and sell. The best thing is that you don't require special training to get started. All you need is basic knowledge on the electronic goods you wish to sell.

5 steps to start an electronic manufacturing business in India

If you wish to open a successful electronic manufacturing business in India, it is essential that you get the basics right. This means crafting a solid business plan that outlines the kind of business you want to start, the marketing strategy, finances, employees, licenses, etc. To help you out, here is a detailed step-by-step plan to start an electronics manufacturing company in India.

Step 1: Analyze your skill sets and interests to find the right industry

Before you even think about products and marketing plans, you should determine the right industry to enter. The electronics industry in India comprises several sub-sectors — cell phones, capacitors, generators, LED lights, etc. — each with different market conditions and scenarios.

Consider what your skill sets are and where your interest lies. This will help you figure out the best type of electronics manufacturing business for you. For instance, if you have a background in electrical engineering, you might want to consider opening a generator and accessories manufacturing business in India.

Step 2: Research potential markets and create a business plan

Once you decide the type of business you wish to operate, you have to begin researching potential markets. For example, if you plan to open a mobile phone manufacturing business in India, you should first know where consumers are currently buying their phones. You should also gather the demographics of the region where you plan to base your business. The location you choose should be conveniently accessible yet away from residential areas.

After you have enough data in hand, draft a detailed business plan that outlines every individual aspect of your electronics manufacturing business, such as goals, objectives, strategies, funding, etc.

Step 3: Register your electronics manufacturing business

Your business plan's first step should be registering your electronics business legally in India. Depending on your requirements and unique situations, you can opt for any business structure, from a sole proprietorship to a corporation, partnership, or limited liability company (LLC). An LLC is often considered cost-effective compared to other business structures as it passes taxation.

Step 4: Hire the right employees

Hiring employees is another crucial step in successfully opening your electronics business in India. When hiring employees, you should ensure they meet specific standards and are the right fit for your business values and morals. This includes having proper certifications or experience, clean criminal records, and the ability to pass drug tests.

Put together a proper hiring plan in place to filter through the applications you receive. At the end of the day, employees form the core of your business, and you don't want to work with the wrong people.

Step 5: Obtain licenses and permits for your electronics business

After hiring employees, the last step to operating an electronics manufacturing business in India is obtaining all the necessary licenses and permits. Depending on where you wish to base your manufacturing plant, you might have to undergo a lengthy process to obtain these documents. Additionally, you should file your taxes at this stage.

3 tips for a successful electronic manufacturing business

Refer to other successful electronic businesses as models

If you wish to take your Indian electronics manufacturing business to success, start looking at other successful electronic businesses in the area as your role models. You should essentially understand what they are doing differently from their lesser-known counterparts. Consider gathering detailed business case studies of both the successful businesses as well as those that failed. Then compare the reports to see what factors resulted in failure and contributed to the success. Finally, apply whatever positives you can to your business plan and use them as a reference for your electronics manufacturing business in India.

Consider business expenses and scale

Though lower than other businesses, starting an electronics manufacturing unit in India requires investing significant capital. For this reason, it is essential to secure the necessary amount (consider inventory, store leasing, salaries, marketing campaigns, and raw materials costs) before you start working on the project. After all, you don't want the project you began with great enthusiasm to be put on a halt due to financial setbacks.

The good news is that there are several ways to start your electronics manufacturing business in India at a lower cost. For instance, you can choose to run your electronics business from home or online by selling on a wholesale marketplace like Alibaba.com. This will significantly help reduce the capital costs associated with a physical storefront.

If you are short on budget, consider looking for investors who can fund your manufacturing business. Currently, many investors and financial firms in India are willing to invest in small-to-medium-sized electronics manufacturing businesses, as long as they can present a solid business plan and great products.

Analyze suppliers' requirements

Like in every other industry, you need raw materials to manufacture consumer electronic products, meaning you should find the right suppliers to source the necessary raw materials from.

Start by coming up with a list of suppliers relevant to your business. Then, reach out to them personally and enquire about their rates, turnaround time, minimum order, certifications, referrals, etc. and narrow down to the ideal supplier. However, your job doesn't end here.

After you choose to work with a specific supplier, you should go through the contracts carefully to ensure there are no discrepancies. You don't want to switch from one supplier to another often, as this will create instability and can lead to you having a bad reputation among suppliers. Instead, you need someone whom you can establish a long-term deal with. This is vital for a smooth working relationship and for the success of your business in India.

Sell on Alibaba.com

Starting an electronics manufacturing business in India might sound exciting and overwhelming at the same time. However, it is not as difficult as it seems. Beginning an electronics business in India is much like any other business idea, except that this industry is constantly evolving. So, it all boils down to proper planning, hard work, and patience to slowly take your business to success.

As mentioned earlier, you can cut costs associated with opening a physical storefront for your electronics business in India by switching to an online store with an online wholesale marketplace.

A trusted marketplace for manufacturers from across the world, having a seller account on Alibaba.com puts your electronic products in front of millions of businesses. Furthermore, with Alibaba.com promoting your platform, your business and products can enjoy free marketing and an expanded reach. So, once you’ve set up your electronic manufacturing business in India, open a seller account on Alibaba.com, and get selling.