The electronics industry in India has grown rapidly in the last decade, with Gujarat emerging as a leading hub. However, supply chain disruptions have been a major roadblock for manufacturers. Whether it’s a semiconductor shortage, shipping delays, or rising raw material costs, electronics manufacturers in Gujarat and across India have felt the heat.

Did you know? India imports over 80% of its electronic components, including semiconductors, from countries like China, Taiwan, and South Korea. So, when the global supply chain is disturbed, our electronics manufacturing sector takes a hit.

But don’t worry! In this article, we’ll break down the common causes of disruptions and how we can tackle them effectively.

Common Causes of Supply Chain Disruptions in Electronics Manufacturing

Raw Material Shortages and Semiconductor Crisis

  • The global chip shortage started in 2020 and still affects India’s electronics manufacturing industry. With India importing 100% of its semiconductors, electronics manufacturers in Gujarat and other regions have struggled to keep up with demand.

  • The demand for semiconductors is expected to grow by 18% annually, but supply constraints have made it tough to get the required components.

Logistics Challenges and Transportation Delays

  • India relies on international shipping for electronic components, and disruptions like the Suez Canal blockage in 2021 and container shortages have led to major delays.

  • Rising fuel costs and congested ports further slow down transportation, impacting delivery schedules.

Geopolitical Tensions and Trade Restrictions

  • Trade tensions between China and the USA have indirectly affected India’s supply chain. Since many components are sourced from China, tariffs and export restrictions create roadblocks for manufacturers.

  • Restrictions on Chinese imports also push manufacturers to find alternative suppliers, which isn’t always easy.

Natural Disasters and Pandemic Effects

  • The COVID-19 pandemic caused major shutdowns, affecting production in India and abroad. Even now, after recovery, the uncertainty in global markets continues to impact supply chains.

  • Natural disasters like floods, earthquakes, and typhoons in component-manufacturing countries like Japan and Taiwan disrupt supplies.

Rising Costs of Components and Freight Charges

  • The cost of raw materials, including copper, aluminum, and silicon, has surged by 30-50% in the last two years.

  • Freight rates for electronics imports have increased by over 200% since 2019, making it more expensive to source components.

The Role of Government Policies in Strengthening India's Electronics Supply Chain

Production-Linked Incentive (PLI) Scheme for Electronics Manufacturing

  • The PLI scheme, introduced by the Indian government, provides incentives for companies investing in local electronics manufacturing.

  • Over ₹76,000 crore has been allocated for semiconductor manufacturing, aiming to reduce India’s dependence on imports.

Make in India and Atmanirbhar Bharat Initiatives

  • India is pushing for local production through Make in India, which encourages companies to set up factories within the country.

  • Many electronics manufacturers in Gujarat have benefitted from this initiative, with major investments flowing into the sector.

Import Restrictions and Local Sourcing Policies

  • India has increased import duties on finished electronics to boost domestic manufacturing.

  • Companies are now looking for Indian suppliers to reduce dependence on international markets.

Customs Duties and GST Impact on Electronics Supply Chain

  • High customs duties on electronic components make imports expensive, but local production incentives aim to balance this out.

  • GST on electronics remains a key factor, with manufacturers seeking tax relief to improve profitability.

Strategies for Overcoming Supply Chain Challenges

Diversification of Suppliers and Sourcing Alternatives

  • Relying on one country for components is risky. Electronics manufacturing services in Indiaare now exploring alternative suppliers from Vietnam, Taiwan, and even local Indian vendors.

  • Gujarat is seeing new investments in semiconductor plants, reducing dependency on imports.

Inventory Management and Demand Forecasting

  • Companies are adopting AI-based demand forecasting tools to predict supply chain disruptions in advance.

  • Maintaining a buffer stock of critical components is also becoming a priority.

Strengthening Logistics and Transportation Networks

  • Investment in smart logistics solutions, including AI-driven supply chain management, is helping companies optimize delivery times.

  • Upgrading ports and improving rail connectivity can reduce transportation bottlenecks.

Leveraging Advanced Technologies in Supply Chain Management

  • Blockchain technology is being used for tracking shipments and ensuring transparency in supply chains.

  • IoT-enabled devices help monitor shipments in real-time, reducing risks of loss or damage.

Risk Mitigation Strategies and Business Continuity Planning

  • Having a backup supplier and alternative logistics routes can help businesses stay operational during crises.

  • Companies are now investing in insurance policies to cover supply chain risks.

Future Trends in Supply Chain Management for Indian Electronics Manufacturing

Growth of India as a Semiconductor and Electronics Hub

  • India is set to invest $10 billion in semiconductor manufacturing, with Gujarat leading the way.

  • The upcoming Tata and Vedanta chip manufacturing plants will boost local production.

Role of 5G and IoT in Supply Chain Optimization

  • 5G technology will enhance supply chain tracking and communication, reducing inefficiencies.

  • IoT-enabled sensors will improve inventory management and warehouse automation.

Adoption of Smart Factories and Industry 4.0 in India

  • Companies are moving towards fully automated factories, using robotics and AI for increased efficiency.

  • Gujarat is emerging as a leader in smart manufacturing with cutting-edge technology investments.

Sustainable and Green Supply Chains for Electronics Industry

  • More manufacturers are adopting eco-friendly production methods, reducing carbon footprints.

  • Recycling electronic waste is becoming a priority to ensure sustainable supply chains.

Conclusion

Supply chain disruptions in electronics manufacturing are a real challenge, but India is taking strong steps to overcome them. Electronics manufacturers in Gujarat and across India are embracing new technologies, diversifying suppliers, and leveraging government policies to build a resilient supply chain.

With local semiconductor production, AI-driven logistics, and smart manufacturing, India is set to become a global leader in electronics manufacturing services.

So, whether you're a manufacturer, supplier, or business owner, staying ahead of supply chain disruptions is all about adapting, innovating, and thinking ahead. Ready to future-proof your supply chain? The time is now!