Articles Written By – Surendra Jauhari
SEBI Registered Investment Advisor
(INA000021474):
Wealth+ Advisers (www.wealthplys.com)
The Electronics Manufacturing Services (EMS)
sector in India has evolved from simple assembly to a high-tech powerhouse.
India was
known for assembly of electronic products and putting parts together but now
the time has changed and it is going to become with India’s goal to reach $500
Billion electronics production country from volume to value.
Parts
were imported and simply put together, now this fundamental shift from Screwdriver
Industry to Full Stack Manufacturing Ecosystem.
‘A shift from Assembly to Value
Addition’
The
Indian EMS market is experiencing rapid growth which is driven by domestic
production targets and rising demand, collectively the broader Indian EMS
manufacturing ecosystem is aiming for $500 billion valued by 2032.
This
growth is part of a broader national ambition to achieve $500 billion in
total electronics production.
Mobile
phones remain the \"hero product,\" expected to contribute roughly 30%-40%
($110–$120B) of the total production value.
Rising
demand for consumer electronics is driving the electronics manufacturing
services market growth.
Building
the “Guts” of Electronics:
Govt. has
launch Electronics Manufacturing Scheme (EMS) in 2025 & in FY26-27 budget,
nearly doubled to Rs, 40,000 crores.
India is now incentivizing the manufacturing of foundation parts rather than importing the “Bill of Materials”
The Semi-Conductor Leap (2.0)
Semi-Conductor
is now operational with allocated budget of ₹8000 crore for FY2027.
In early
2026, commercial production has been started by Micron ATMP in Sanand, Gujarat.
Three
more plants including Tata Electronics Fab in Dholera are expected to start the
production later this year.
The Product
Nation Ambition:
India’s
2026-30 goal is to become Product Nation and moved beyond from contract
manufacturer (EMS) to brands like Apple and Samsung.
The
transition from “Pure Assembly” to “Design & IP” represent a climb up to
the electronics Value Chain.
Pure
Assembly has
margins of 2%-4% and this is often called “Box-Build” for low-level EMS, where
components like (Chips, screens, and batteries) are provided by either the
client or third party. In Pure Assembly, they just put together, test and ship.
Component Manufacturing has margin of 8%-12% and this is known as backward integration. Instead of putting together they manufacture the Printed Circuit Board (PCBs), the plastic castings or the charger themselves, manufacturing a multi-layer PCSs requires chemical engineering and precision machinery. This created a moat. No one can start this tomorrow.
Design
&IP/ODM has margin
of 15%-25% known as Original Design Manufacturer. It works like – brand/s
say, I want to sell a smartwatch with these 5 features now ODM company designs
the circuit, writes the firmware (software), select the component and
manufacture it. The brands can only put their logo on it. ODM are selling
intellectual property (IP) and brainpower.
Key
Highlights:
Strategic
Growth Drivers:
· Policy Support the PLI: Schemes have catalysed multi-billion-dollar investment. FY26-27 budget outlay of 40,000 crore encourages EMS firm to move away from importing to self-manufacturing PCBs, Lithium-ion cells, and camera modules locally.
· China-Plus-One Strategy: Global OEMs are diversifying their supply chains away from China. India is going to take benefit of stable policy and competitive labour costs.
· Sector Diversification: Automotive revolution, electronics now account for up to 40% of a vehicle cost. Medical devices, outsourcing of high-precision healthcare electronics is the fastest growing niche.
· Global Manufacturing Hub: India has already become 2nd
largest mobile manufacturing hub.
· Digital Infrastructure: AI & Data Centres expansion
estimated to reach $150 billion.
· Talent Pool: 20% of global chip design talent
is located in India. Supporting giants like intel, AMD and Nvidia.
IT
Hardware, brands like HP, Acer are now manufacturing laptops and tablets in
Indian through local EMS partners like Dixon and Kaynes.
The "New Balance" (2032 Projection)
|
Segment |
Current
Share (FY25) |
Projected
Share (FY32) |
Why
it's changing? |
|
Mobile
Phones |
44% |
30% |
Market
reaching maturity, focus shifting to other devices. |
|
Components/Semi-Conductor |
10% |
30% |
Moving
from "Assembly" to "Deep Manufacturing." |
|
Industrial
& Auto |
12% |
18% |
Driven
by EVs, Smart Cities, and 5G/6G infrastructure. |
|
Others
(IT/Medical) |
34% |
22% |
High-value,
specialized electronics for healthcare/defence. |
Challenges
and the Road to 2032:
Thin Margin:
Traditional
contract manufacturers have 2-4$ margin, to move ODM level (original design
manufacturer) model need to have higher capex to command higher margin.
Component
Ecosystem: Indian
still imports a large percentage of active components (semi-conductor).
Skilled
Talent Gap: While
the large talent pool, still required focus on specialized industry ready
training to reach long-term goals. Still, there is a plenty of shortages of
specialized engineers for Advanced Packaging and VLSI Design.
Conclusion
India’s
EMS sector is at an inflection point. The focus is shifting from
\"Assembled in India\" to \"Designed and Made in India, the key
story for 2026 is the backward integration—how companies are moving from
simple box-builds to manufacturing the very chips and boards that go inside
them.
Disclaimer
Articles Written By – Surendra Jauhari
⚠️ SEBI Disclosure & Disclaimer
When discussing financial markets, projections, and
economic targets, it is important to include a formal disclaimer in the Indian
context.