India’s Electronic Manufacturing Services Market Set to Reach $72.2 Billion by FY27, Driven by Government Initiatives

• Hrishikesh
• August 28, 2024
• India, News
• Amber Enterprises, Apple, Component Manufacturing, Dixon Technologies, Electronic Manufacturing Services, Electronics Production, EMS Market, Foxconn, FY27, Global Value Chains, Government Initiatives, Growth, GVC, india, Industrial Infrastructure, investment, market leadership, NITI Aayog, Pegatron, PLI, Production Linked Incentive, samsung, Semicon India, Technology Transfer
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India’s electronic manufacturing services (EMS) market is on a robust growth trajectory, expected to surge from $17.5 billion in FY22 to $72.2 billion by FY27, reflecting a compound annual growth rate (CAGR) of 32%, according to a recent report by Motilal Oswal Financial Services. This remarkable expansion is fueled by a series of government initiatives aimed at boosting the domestic electronics manufacturing sector.

The Indian government has been proactive in promoting the electronics manufacturing industry, with key initiatives such as the Production Linked Incentive (PLI) schemes and the Semicon India programme. These measures are designed to incentivize both large-scale and small-scale electronics manufacturing, making India an attractive destination for global and domestic players alike.

Despite the rapid growth in the EMS market, the report highlights that component manufacturing in India has not kept pace. Component manufacturing, which is critical for achieving greater localization and value addition, faces challenges due to the need for significant upfront capital expenditure and a longer gestation period of 1-2 years from investment to production. As a result, the industry is seeking additional support from the government to further boost this segment.

In response, Niti Aayog has recommended several strategies to enhance component manufacturing in India. These include fiscal incentives, support for research and development, tariff simplification, soft infrastructure initiatives, technology transfer enablement, and the establishment of industrial infrastructure zones. These measures are expected to strengthen India’s position in the global electronics manufacturing value chain and improve its integration into global value chains (GVC).

The report also underscores the progress made in electronics production in India, which has grown from $48 billion in FY17 to $101 billion in FY23. Looking ahead, India’s electronic manufacturing capacity is projected to reach $500 billion by FY2030, with $350 billion attributed to finished goods and $150 billion to components. Achieving this ambitious target will require substantial investments in enhancing the component ecosystem.

Several leading companies, such as Dixon Technologies and Amber Enterprises, have already established market leadership in their respective domains and are now focused on expanding their presence across different segments and pursuing backward integration. Additionally, major global players like Foxconn, Pegatron, Apple, and Samsung have a significant presence in India’s electronics value chain, further bolstering the country’s capabilities.

The report concludes by noting that progress in component manufacturing is already being initiated by a few companies, and this trend is expected to accelerate in the coming years as the ecosystem continues to evolve.