IGI Logo

Backed by robust government measures, the domestic electronic manufacturing services (EMS) market is poised to grow at a 32 per cent compound annual growth rate (CAGR) in the FY22-FY27 period to reach $72.2 billion from $17.5 billion in FY22, a report showed on Monday. 

The government has initiated various measures, such as the production-linked incentive (PLI) schemes and the Semicon India programme, to promote electronic manufacturing in the country.

Additionally, the centre has reopened the window for the PLI scheme for white goods (domestic appliances) to attract more investments.

According to the report by Motilal Oswal Financial Services, to further boost localisation and value addition in India, additional initiatives will be necessary to promote component manufacturing in the country, where the government is already working on various schemes.

“Component manufacturing has not shown the same growth as it requires an upfront initial capex and has lower asset turnover ratios with a gestation period of 1-2 years from investment to production. Hence, industry is seeking more initiatives from government to boost component manufacturing in India,” the report mentioned.

Niti Aayog has recommended several measures to boost component manufacturing and India’s positioning in the global electronics manufacturing and country’s integration into global value chains (GVC).

These include fiscal incentives for component manufacturing, incentives for investing in research and development, tariff simplification, soft infrastructure initiatives, tech-transfer enablement and setting up of industrial infra zones.

In the EMS market, companies like Dixon Technologies and Amber Enterprises (BUY) have achieved market leadership in their key domains and are now concentrating on expanding their presence across different segments and backward integration.

With several government measures, electronics production moved up from $48 billion in FY17 to $101 billion in FY23.

India’s electronic manufacturing capacity is projected to reach $500 billion (finished goods $350 billion and components $150 billion) by FY2030 which would imply significant investments in enhancing the component ecosystem.

According to the report, the country has significant presence and capabilities of assemblers and original equipment manufacturers (OEMs) in the electronics value chain such as Foxconn, Dixon, Amber, Pegatron, Apple, Samsung, BoAt and Atomberg, among others.

“A progress on component manufacturing is being initiated by few companies which will evolve more in the coming years,” the report mentioned.