स्तम्भ Stambh · Arthanīti

The Phone Is the Easy Part

Smartphones are now India’s largest export, and three in four of them are iPhones. That is a real achievement and the easy half of one. What India builds next is the part inside the phone, and that is where a founder should be looking.

Nikhil Sharma · अर्थनीति Arthanīti · 11 October 2026 · 4 min read

In the year to March 2026 India exported $441.75 billion of goods across more than eleven thousand product lines. The largest single line was not diesel, diamonds or medicines. It was the smartphone, at $29.36 billion, about one rupee in every fifteen the country earned abroad. Five years ago that sentence would have been a forecast. Today it is a customs statistic.

Most of those phones carry one logo. iPhone exports from India crossed two lakh crore rupees in the first eleven months of the year, more than three quarters of all smartphone exports. In 2021-22 the same line was worth about ₹9,350 crore. That is a twenty-fold rise in four years, and it was built by a policy that paid manufacturers for every additional phone they made here, by a supplier base that now includes more than forty Indian companies and by roughly a quarter of a million people who work in that ecosystem.

It deserves to be said plainly: this worked. For a generation India was told it had missed manufacturing and would have to live on services. The country now ships the most demanding consumer product in the world at scale. I do not want to argue that away.

Assembling the phone was the easy half. The half that stays is inside it.

Why it is the easy half

Assembly is the last step of a long chain. It is where the most people stand and the least value stays. A phone made in India from a screen, a battery, a camera module and a circuit board made elsewhere earns India the margin of putting them together and the wages of the people who do. That is worth having. It is also the stage that can move most easily to the next country with a better incentive.

The government knows this. 2025-26 was the final year of the smartphone incentive scheme. The bet has moved inside the phone. The Electronics Component Manufacturing Scheme opened in April 2025 with an outlay of ₹22,919 crore. It drew 249 applications and some ₹1.15 lakh crore of proposed investment, nearly double its target, and in the budget this February its outlay was raised to ₹40,000 crore. By 17 August, 106 projects worth ₹69,548 crore had been approved.

Read those numbers as a founder and not as a newspaper. They say that the money, the policy and the large buyers are now all pointed at the same layer: the parts. Enclosures, connectors, passive components, camera and display modules, batteries, the precision tooling to make them and the testing to certify them. None of it is glamorous. All of it has to be bought by someone, and right now much of it is bought from abroad.

The pattern in the long tail

The same export list carries a lesson that has nothing to do with phones. Below the headline items sit lines nobody writes about. India exported more than $948 million of human hair and hair products last year. More than $150 million of agarbatti. Nearly $6 million of snake venom, for antivenom and research. Chess sets and carrom boards, about $4 million and $3 million.

I keep a copy of lists like this because they cure a specific founder illness: the belief that a market is only real if it is fashionable. A billion dollars of hair is a billion dollars. Somebody collects it, grades it, cleans it, ships it and gets paid. The unfashionable category with a real buyer abroad beats the fashionable one with a pitch deck and no buyer at all. The component layer is the same pattern at a larger scale. It is unfashionable, it is specific and it has buyers waiting.

What a founder should do with this

Three things, in order. First, sell to the assemblers before you sell to the world. The large plants already in India need local suppliers to meet their own commitments, and a supplier that is close, certified and dependable is worth more to them than one that is slightly cheaper and six weeks away. Second, pick one part and become boringly good at it. The Thermopylae rule from the Raṇanīti shelf applies: choose the narrow pass where the large foreign supplier’s scale counts for least. Third, build the quality system before the factory. In components the certificate is the product. A plant without it is a building.

The fair objection is that this is subsidy chasing and subsidies end. The phone incentive just did. My answer is that the subsidy is not the opportunity. The buyer is. A component maker whose plan works only with the incentive has a grant, not a business. One whose plan works without it and uses the incentive to arrive two years sooner has a business that the policy simply accelerated.

India learnt to assemble the phone. The next decade is about what goes inside it, and the companies that make those parts will not be famous. They will be suppliers. Arthanīti is the shelf on which I watch what India builds, buys and exports next. On this evidence it is building the parts.

Gurugram, 11 October 2026. The first piece on the Arthanīti shelf.

Sources, checked 11 October 2026. The export basket and the long tail: Business Today, 30 July 2026 for the $441.75 billion total, the $29.36 billion of smartphones, their 6.65 per cent share and the smaller lines. iPhones: Business Standard, 29 April 2026 for the ₹2 trillion in eleven months, the share of smartphone exports, the series from FY22, the forty-plus Indian suppliers, the employment figure and FY26 as the final year of the smartphone PLI. Components: Outlook Money for the original ₹22,919 crore outlay, the 249 applications, the ₹1.15 lakh crore of proposals and the ₹40,000 crore in the 2026 budget; ThePrint, 17 August 2026 for the 106 approved projects worth ₹69,548 crore.