India’s EMS industry projected to reach US$ 55 bn by 2027

India’s Electronics Manufacturing Services (EMS) industry is on the brink of a significant revenue surge, with projections indicating a more than doubling of revenues to reach US$ 55 billion by FY 27. This anticipated growth is fueled by increased local component sourcing and the expansion plans of global tech giants like Apple, Samsung, and Lenovo.

As India positions itself to become a key player in the global value chain (GVC) of the electronics sector, coordinated efforts across multiple ministries and ongoing engagement with industry leaders will be crucial in achieving this ambitious target.

Image credit: Shutterstock

India’s domestic electronics manufacturing services (EMS) industry revenues are expected to more than double to US$ 55 billion by FY27, driven by increased component sourcing locally, with Apple, Samsung, Lenovo, and other global companies expected to expand their presence in India.

According to a BNP Paribas report, Apple plans to invest US$ 40 billion over the next 4-5 years to significantly increase its production capacity in India, while Korean giant Samsung plans to expand its manufacturing presence by producing laptops in addition to smartphones.

IT hardware giant Lenovo intends to manufacture servers in India to support its expanding data centre business, taking advantage of the production-linked incentive (PLI) scheme for IT hardware. Other global companies, including Acer, HP, and Nokia, are expanding their presence in India, according to BNP Paribas.

The report states that the total addressable market for domestic EMS players is expected to grow at a 27% CAGR to US$ 100 billion by FY27, driven by declining finished goods imports (at 3% CAGR) and rising component production, currently growing at 13% CAGR, to surge to 19% CAGR in FY23-27.

“While the pace of imports of finished goods (particularly mobiles, TVs, and ACs) has slowed in recent years, the electronics industry remains dependent on imports, especially for consumer and industrial electronics components, IT hardware and LED components,” as per the report.

India’s electronic manufacturing industry, which saw its aggregate revenue rapidly expand from US$ 25 billion in FY13 to US$ 100 billion in FY23 as a result of lower value-added manufacturing capabilities and various government initiatives such as customs duties on imported finished goods and production-linked incentive schemes, is set to account for a growing proportion of global revenues estimated to be around US$ 900 billion in CY31, according to the report.

Policy and Future Outlook

Industry executives emphasise the importance of policy continuity in maintaining growth momentum, as well as the implementation of new initiatives such as a PLI scheme for components and wearables. Pankaj Mohindroo, chairman, India Cellular and Electronics Association, said, “For India to become a key player in the global value chain (GVC) in the electronics sector, we need a mission-mode approach with clear goals and timelines to quadruple the sector’s output in the next five years. This ambitious target will require coordinated efforts across multiple ministries and continuous engagement with industry leaders.” adding that a predictable regulatory environment ensuring ease of doing business is essential to foster growth and innovation.

“We must make our nation the best location to do business for GVCs. Simultaneously, we must build champion Indian companies. An appropriate PLI for components and sub-assemblies as well as wearables and hearables will drive domestic value addition and attract new investments,” Mohindroo further adds.

The industry has proposed a Rs 30,000-35,000 crore PLI scheme for components and sub-assemblies, as well as capital expenditure support, in an effort to increase domestic value addition to 35-40% from 18% currently.

Ashok Chandok, President of India Electronics and Semiconductor Association, said the new government should now take up and evaluate the proposals to set up semiconductor fabs and continue to provide financial support and incentives to the industry. He said there should now be a focus on creating a component ecosystem championing local product design through R&D and support the sector with the skills required through country-to-country knowledge transfer agreements.

As India positions itself to become a key player in the global value chain (GVC) of the electronics sector, coordinated efforts across multiple ministries and ongoing engagement with industry leaders will be crucial in achieving this ambitious target.