For years, the global supply chain for extended reality (XR) hardware—the smart glasses, VR headsets, and augmented reality displays that define next-generation computing—had a single address: China. From component sourcing to final assembly, the ecosystem was concentrated in Shenzhen and its surrounding manufacturing heartland. That monopoly is ending. A new hub is emerging, one with the demographic heft, policy ambition, and engineering talent to challenge China’s dominance. That hub is India.

For the CEO, Head of Manufacturing, and Chief Strategy Officer, this is not a distant possibility. It is a transformation happening now, driven by converging forces: a government betting big on the AVGC-XR sector, a burgeoning domestic market projected to reach $7.8 billion by 2030, and pioneering manufacturing partnerships that are already producing India’s first domestically made smart glasses. The question for Indian business leaders is no longer whether India will become an XR hardware hub, but how quickly your organization can position itself to lead in this new ecosystem.

The Market Imperative: Why XR Manufacturing Is Moving

The numbers tell an unmistakable story. India’s extended reality market hit $4.3 billion in 2024 and could grow to $63.6 billion by 2033. The immersive technology market is projected to reach $7,818.7 million by 2030, growing at a compound annual rate of 29.8%. Globally, the immersive technology market could exceed $250 billion by 2030, yet India’s current contribution is less than 1% of that total.

This gap between potential and current reality is precisely what makes India attractive to global manufacturers. A market of this scale, combined with rising domestic demand, creates the perfect conditions for local manufacturing to take root. When you add government incentives and a young, tech-savvy population—smartphone usage is projected to reach 96% by 2040—the case for building XR hardware in India becomes compelling.

The Policy Foundation: Government as Catalyst

The Indian government has made the AVGC-XR sector a strategic priority. The Union Budget 2026 reinforced this commitment with concrete measures:

• Support for the Indian Institute of Creative Technologies (IICT) in Mumbai to establish AVGC Content Creator Labs across 15,000 secondary schools and 500 colleges 
• Establishment of a new National Institute of Design to address talent shortages 
• Recognition that the sector will need nearly 2 million skilled professionals by 2030 

The government’s commitment extends beyond education. The National AVGC-XR Policy is being implemented to boost India’s global competitiveness through infrastructure development, skill enhancement, and regulatory measures. The Animation, Visual Effects, Gaming, Comics, and Extended Reality (AVGC-XR) sector already accounts for 20% of India’s media and entertainment industry and is expected to create over 160,000 new jobs annually.

The Manufacturing Milestones: Proof That India Can Build

The transition from policy to production is already visible. In October 2023, Reliance Jio launched JioGlass, India’s first domestically made smartglass, combining augmented and virtual reality capabilities in a lightweight, compact form factor. This was not an imported product with an Indian label; it was designed and manufactured in India, demonstrating that domestic production of sophisticated XR hardware is achievable.

More recently, the partnership between QWR and Kaynes has established India’s first end-to-end XR manufacturing ecosystem, aiming for 80-85% localisation. This is the kind of deep integration—from component sourcing to final assembly—that creates a self-sustaining manufacturing cluster.

Karnataka, already contributing nearly 20% of India’s media and entertainment industry with over 300 AVGC-XR studios and a workforce of around 15,000 professionals, is positioning Bengaluru as India’s global hub for creative technology. The state’s AVGC-XR Policy 2024–2029 focuses on building globally competitive content studios, encouraging original IP creation, and accelerating the adoption of AI-enabled production workflows.

The Talent Dividend: India’s Demographic Advantage

China’s manufacturing rise was built on its massive, disciplined workforce. India’s demographic profile offers an even longer runway. With a median age of 28, India will have the world’s largest working-age population for decades to come.

This matters enormously for XR manufacturing, which requires a blend of precision engineering skills and digital fluency. The government’s investment in AVGC labs across thousands of schools and colleges is creating a pipeline of workers who are not just factory operators but technicians who understand the technology they are assembling.

Industry leaders recognize this. As Rajiv Chilaka, founder of Green Gold Animation, noted, the budget measures will empower regional creators with access to world-class tools and training, driving original IP in local languages and expanding jobs. This talent ecosystem becomes a powerful magnet for global companies seeking manufacturing locations.

The Domestic Market: Manufacturing for India, Selling to the World

A manufacturing hub cannot survive on exports alone. It needs a robust domestic market to provide base demand, and India has that in spades.

• The AR and VR eyewear market touched $608 million in 2024 and is projected to reach $1.67 billion by 2033 
• The virtual reality market alone is projected to grow at a 35.50% CAGR through 2035, reaching $39.85 billion 
• The online gaming, animation, and VFX market is estimated to reach $6.8 billion by 2026 

This domestic demand allows manufacturers to achieve scale locally before competing globally. It also enables them to tailor products to Indian conditions—designing for the “Indian head” as QWR discovered through months of R&D, or optimizing for Indian languages and contexts as Sarvam AI and Lenskart are doing with their smart glass platforms.

The Strategic Opportunity for Indian Business Leaders

For executives considering their role in this emerging ecosystem, the opportunity is multi-layered.

For Electronics Manufacturers: The XR hardware supply chain is being built from scratch. This creates openings in component fabrication, PCB assembly, optical engineering, and final device assembly. Companies that invest now in the specialized capabilities required for XR—waveguide displays, eye-tracking sensors, ultra-low-power processors—will be the foundational suppliers for years to come.

For Brands and OEMs: The availability of domestic manufacturing capability means you can now develop XR products without importing finished devices. Partnerships with manufacturers like the QWR-Kaynes ecosystem enable faster iteration, lower logistics costs, and the ability to claim “Made in India” status—a powerful marketing advantage.

For Technology Companies: The convergence of XR hardware with India’s sovereign AI stack (Sarvam’s Indic models, for instance) creates opportunities to build integrated solutions that global competitors cannot easily replicate. A smart glass that understands 22 Indian languages, processes data locally for privacy, and is manufactured domestically is a product with an unassailable moat.

The Challenges That Remain

No transformation is without obstacles. Hardware costs remain a barrier—high-end AR headsets cost between ₹168,760–₹295,331 each, and enterprise VR systems can reach ₹843,804 with software and support. Yearly maintenance adds 20% to total ownership costs.

The supply chain for specialized XR components – microLED displays, diffractive waveguides, advanced optics—is still concentrated in East Asia. Building domestic capability in these areas will require sustained investment and patience.

And as some industry observers note, creating a skilled workforce is not just about building labs. It requires a “three-tier” approach: mass exposure through labs, elite nurture through mentorship and apprenticeships, and a demand engine through IP creation and export strategy.

Conclusion: The Window Is Open

The conditions for India to become the XR hardware hub outside China have never been more favorable. A growing domestic market provides demand. Government policy provides support. Pioneering manufacturers provide proof of concept. A young, increasingly skilled workforce provides the talent.

For business leaders, the question is timing. The window to establish a position in this emerging ecosystem is open now, but it will not remain open forever. As global XR adoption accelerates—driven by applications in healthcare, manufacturing, education, and enterprise—the companies that have already built manufacturing capability in India will be the ones capturing value.

The pieces are in place. The market is growing. The policy is supportive. The talent is emerging. India’s journey to becoming the XR hardware hub for the world is not a question of if, but how quickly we seize the opportunity.

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