New Delhi, Aug. 27 -- Inside the Optiemus Electronics Ltd (OEL) factory in Sector 65, Noida, a bare green printed circuit board (PCB) etched with copper pathways enters one end of a production line. As it passes through, machines deposit solder paste and place tiny electronic components on it at high speed. Next, software is loaded, connections tested, and casings fitted. Eventually, a finished Wi-Fi router emerges. The journey of that router is also a small illustration of the shift India is trying to make.

OEL, a contract manufacturer, is making the routers for TP-Link, a California-based networking-equipment company that has moved its production from China to Vietnam, Brazil and India. It began working with Optiemus last year. Besides...