India’s Soaring Electronics Manufacturing Service Sector

The Electronics Manufacturing Service (EMS) sector in India is experiencing significant growth and is poised to play a pivotal role in the country’s digital transformation.

Here are key points about the potential of the Indian Electronics Manufacturing Service (EMS) sector:

1. Growth Trajectory: India’s EMS industry is on a rapid growth trajectory. Although it currently represents a minor player with a 2.2% share of the global market (USD 20 billion), forecasts project a Compound Annual Growth Rate (CAGR) of 32% over the period 2021-2026. This growth is driven by both domestic demand and international shifts in manufacturing paradigms, including the migration of electronics markets from China.
2. Government Initiatives: The Indian government has taken initiatives like ‘Make in India’ to promote the country as a global electronics hub. The Production Linked Incentive (PLI) scheme and the Semiconductor mission are examples of policies aimed at catalyzing the growth of the EMS sector.
3. Challenges: While the potential for growth is immense, there are challenges to overcome. The EMS sector currently accounts for only 0.6% of India’s GDP, indicating room for expansion. Challenges include the need for indigenization of raw materials and the availability of low-cost labor. The lack of a well-established domestic electronic components manufacturing base and infrastructural and regulatory hurdles are some of the obstacles.
4. Technological Advancements: The EMS sector is influenced by technological advancements like Electric Vehicles (EVs), 5G, AI, IoT, and clean energy. While these advancements create new opportunities, they also bring complexity and competition. The readiness of EMS companies to adapt to these technologies is a crucial factor.
5. Global Resonance: The global EMS industry is poised for growth with projections of a CAGR of 5.4% from 2021 to 2026. This trend is not limited to the EMS industry but extends to the broader electronics market, contributing to its growth.
6. Indian EMS Landscape: The Indian EMS sector is expected to grow at a CAGR of 32% from 2021 to 2026, with the sector’s valuation estimated to cross US$215 billion by 2025-26. This growth extends beyond manufacturing to design, testing, and component sourcing services, enhancing the value proposition of the Indian EMS sector.
7. Opportunities and Challenges: The narrative of opportunities in the Indian EMS sector is influenced by the indigenization of raw materials and the availability of low-cost labor. However, these opportunities are juxtaposed with challenges, including raw material indigenization and infrastructural and regulatory hurdles.

Conclusion:

In conclusion, the EMS sector in India is at a crucial juncture, with significant potential for growth, but it also faces challenges that need to be addressed. Government initiatives, technological advancements, and global market dynamics are driving this sector’s growth, making it a vital player in India’s digital and technological narrative. Investors and policymakers should closely monitor this sector as it holds promise in India’s journey towards achieving a $5 trillion economy.

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Karthick Jonagadla is registered with SEBI with INH000008312 as the SEBI registration number. The registered office address of Karthick Jonagadla is D4 Plot 265, Ujjwal CHS, Gorai 2, Borivali West, Mumbai 400092.