The government has approved 22 investment proposals under the Electronics Components Manufacturing Scheme (ECMS), marking a significant boost to India's electronics manufacturing sector. The approvals include major industry players such as Foxconn, Dixon Technologies, Tata Electronics, and Samsung, representing the third set of clearances under the ambitious scheme.

Major Investment and Production Targets

The approved projects demonstrate substantial scale and economic impact across multiple parameters:

The projects span across Andhra Pradesh, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Tamil Nadu, Uttar Pradesh, and Rajasthan, reflecting the government's focus on geographically balanced industrial growth.

Apple Ecosystem Vendors Drive Growth

A significant portion of the investments and employment opportunities will come from Apple's new vendors joining its global supply chain. Five key vendors from Apple's ecosystem have received approval: Motherson Electronic Components, Tata Electronics, ATL Battery Technology India, Foxconn (Yuzhan Tech India), and Hindalco Industries. These companies will export to Apple's international locations, strengthening India's position in global electronics supply chains.

Investment Distribution Across Categories

The investment allocation reveals strategic focus areas for electronics manufacturing:

The approved products include 5 bare components (PCBs, capacitors, connectors, enclosures, Li-ion cells), 3 sub-assemblies (camera modules, display modules, optical transceivers), and 3 supply chain items (aluminium extrusion, anode material, laminate).

Key Company Projects and Employment

Major companies have committed to substantial manufacturing operations and job creation. Foxconn's Yuzhan Tech India project in Tamil Nadu will manufacture mobile phone enclosures, generating employment for over 16,200 people. Tata Electronics will establish mobile phone enclosure manufacturing in Tamil Nadu, creating 1,500 additional jobs.

Other approved companies include Samsung Display Noida, Dixon's subsidiaries (Kushan Q Tech Microelectronics India and Dixon Electroconnect), TDK India, BPL Limited, Wipro Hydraulics, and AT&S India, among others.

Government's Strategic Vision

Union IT Minister Ashwini Vaishnaw emphasized the Centre's focus on big reforms, enabling policies, and efficient project execution. The minister encouraged industry players to prioritize design teams and adopt Six Sigma practices for global competitiveness. These approvals, combined with previous ECMS tranches and ongoing semiconductor initiatives, underscore India's determination to become a major hub in global electronics supply chains.

The scheme targets cross-sectoral applications including mobile manufacturing, telecom, consumer electronics, strategic electronics, automotive, and IT hardware, positioning India as a comprehensive electronics manufacturing destination.

Indian equity markets appear less expensive than their US counterparts when evaluated on market capitalisation to GDP metrics, despite trading above historical averages, according to a recent report by Axis Direct. The analysis suggests that while Indian markets show elevated valuations on certain indicators, they remain reasonably priced when adjusted for growth expectations and earnings strength.

Current Valuation Metrics

The report reveals that India's total market capitalisation to GDP currently trades at 137%, which exceeds the long-term average. However, this assessment has been recalibrated following the government's revised FY25 GDP estimate of ₹324.00 trillion released on February 1, 2025.

When the projected nominal GDP for FY26 is factored in, the Mcap-to-GDP ratio moderates to approximately 125%, which the report characterizes as fairly valued.

Bond Market Developments

The bond market has witnessed significant corrections that support the valuation assessment. Indian bond yields have declined by 26 basis points since November 2024, coinciding with the start of the US Federal Reserve's rate cut cycle. This correction stems from multiple factors including expectations of consumption growth, fiscal consolidation measures outlined in the Union Budget, and potential rate cuts by the Reserve Bank of India.

Following recent equity market corrections, the Bond to Equity Earnings Yield Ratio (BEER) now trades slightly above its long-term average, indicating relatively balanced valuations between bonds and equities.

Historical Context and Earnings Momentum

The report draws comparisons with previous market cycles to provide historical perspective. A similar phase of strong upward earnings momentum occurred in FY10, immediately after the global financial crisis, when the Market Cap-to-GDP ratio reached 95-98%. The analysis suggests that with positive earnings momentum in the current cycle, higher Mcap-to-GDP ratio levels could emerge in upcoming quarters.

Comparative Analysis

Despite trading above long-term averages, the report concludes that Indian equity valuations remain reasonable when adjusted for growth expectations and earnings strength. The key finding indicates that Indian markets compare favorably with US markets on the Mcap-to-GDP metric, suggesting relatively attractive valuations for domestic equities despite elevated absolute levels.