After establishing itself as a major smartphone manufacturing hub, India has now turned its focus on building hardware that powers artificial intelligence…
In the last decade, India has gone from one of the major importers of smartphone devices to one of the biggest exporters. Powered by government incentives, supply-chain diversification and Apple’s expanding production, India has become one of the leading exporters of mobile phones.
In fact, according to a recent report in The Times of India, India’s smartphone exports have surged 165-fold over the last decade, reaching ₹2.59 lakh crore in FY26. That puts India in among the top manufacturers in the world!
But that shift is changing towards AI hardware. Products like servers, networking equipment, storage systems and high-performance computing hardware are much more valuable for a deeper technology ecosystem and that’s why India is increasingly focussed on AI infrastructure.
AI Servers Could Become India’s Next Big Export Opportunity
From AI powered chatbots to enterprise copilots, all AI applications require specialised hardware. These are located inside data centre and they require servers, networking switches, storage systems and cooling equipment.
As India continues to expands its domestic data centre capacity, a lot of these systems are now manufactured or assembled locally instead of importing locally. Several companies that were previously focussed on electronics manufacturing have now expanding into enterprise infrastructure, producing servers, networking devices and AI-ready systems for both domestic and overseas markets.
It is a massive opportunity as AI infrastructure utilises hardware that is far more sophisticated than traditional cloud computing. These is why most manufacturers are turning their attention towards higher-value engineering, systems integration and precision electronics.
Building an AI Hardware Ecosystem
The focus is on building an ecosystem where domestic companies design, manufacture and integrate AI hardware alongside global technology firms.
VVDN Technologies, an engineering company, has already expanded into server manufacturing, networking equipment and data centre hardware. Meanwhile, global OEMs are increasing their local production to diversify their supply chains. HP Enterprise has recently partnered with VVDN to manufacture enterprise servers in India.
Another major news is MSI’s recent announcement that it would expand local manufacturing of AI laptops in India. This shows how AI-specific hardware has become a priority across the electronics sector rather than remaining limited to cloud infrastructure.
Government policy is also evolving to support the manufacture of AI hardware locally. A recent report in Reuters mentions that India has proposed extending tax exemptions until 2041 for foreign companies supplying manufacturing equipment. This move will encourage greater investment in advanced electronics production.
Why the Global Supply Chain Is Changing
Unlike smartphones, AI hardware requires close integration between hardware design, software optimisation and enterprise deployment. This puts India at an advantage over other countries as we already have a large engineering workforce, rapidly expanding electronics manufacturing capacity, government incentives and one of the world’s fastest-growing domestic AI markets.
As more and more AI data centres are built across the country, local demand becomes a catalyst for manufacturing investment. This in turn will allow suppliers to scale before expanding into exports.
The Last Word
By shifting focus from smartphones to AI hardware, India is moving up the value chain. Smartphones helped build factories, logistics networks and skilled workforces but AI hardware offers the opportunity to get into enterprise technology, advanced electronics and digital infrastructure.
And this won’t be limited to creating factories. Investments in semiconductor packaging, precision manufacturing, power electronics, component ecosystems and research capabilities is what will take India to the next level.
If all goes to plan, India is set to become one of the biggest exponents of AI hardware, the tools needed to make artificial intelligence possible.
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