The EMS sector in India is a very rapidly growing and crucial part of the country’s electronics industry. Driven by factors like domestic demand for electronics, increasing outsourcing by global companies, and government initiatives, this sector has seen significant growth in recent years.
In this article, we’re going to explore this industry in depth and try to understand what is driving this growth.
Defining the electronics manufacturing services sector
The growth in this sub sector has been driven by huge booms in the overall electronics market in India. Pushed by end-user industries and outsourcing of manufacturing by OEMs, the EMS sector has evolved over the years to become fairly sophisticated in India.
The global electronics market was estimated to be worth $2.5tn in 2021. The global EMS market, on the other hand, was valued at more than $880bn.
Of this humongous industry, India formed a small 2.2% share, but is expected to grow at a very high rate of around 32% CAGR from 2021-26.
The EMS market in India offers several different sorts of services including:
- Printed circuit board (PCB) assembly: Creating the core boards that house electronic components.
- Box builds: Assembling complete electronic products, including adding logos and packaging them for sale.
- Component sourcing and procurement.
- Testing and quality control.
Growth drivers for the EMS sector
Over the next 5 years, the Indian EMS market is expected to be worth $80bn, providing growth opportunities to strategic and financial investors. A very large portion of this growth will be seen in the mobile phone, consumer electronics, and appliances categories, followed by lighting, automobiles, and others.
Even though the rising middle class population and growing disposable incomes are driving demand for manufactured electronics and in turn, these services, many global electronics manufacturers who used to outsource to China are not shifting to India. This is being done to ensure that supply chains work uninterrupted.
Other factors in China including trade disputes, and the Indian government’s efforts to attract foreign investment in India has helped this growth over time.
Several original equipment manufacturers are also outsourcing a large portion of their manufacturing to Indian EMS companies because they need to compete with their peers on the complexity of electronics, the need to reduce costs, and a push to use sustainable materials in their products.
CTA: Electric vehicles in India
Biggest EMS players in India
Here is an overview and a brief description of the largest (public) EMS players in India.
Dixon Technologies (India) Ltd. (DIXON)
Market cap: ₹ 61,757cr (approx. $7.7bn)
Listing: NSE & BSE
Core competencies: A leader in contract manufacturing, Dixon boasts a diverse portfolio encompassing mobile phones, TVs, washing machines, set-top boxes, and more. They have established partnerships with major global brands.
Syrma SGS Ltd. (SYRMAGSG)
Market cap: ₹ 4,658cr (approx. $0.58bn)
Listing: NSE & BSE
Core competencies: Syrma SGS focuses on high-precision, high-value electronics. Their expertise lies in areas like medical devices, automotive electronics, and industrial automation equipment, making them a fast-growing player in niche markets.
Private companies
There are several other private players in the country for EMS, and they’re listed below:
- Flextronics Technologies (India): A global EMS giant with a significant presence in India, manufacturing a wide range of electronic products.
- Foxconn Hon Hai Precision Industry Co., Ltd. (India): Another major global player with a presence in India, known for their work with Apple products.
- Wistron IT India Pvt. Ltd.: A subsidiary of the Taiwanese Wistron Corporation, known for manufacturing laptops and smartphones.
- VVDN Technologies India Pvt. Ltd.: A rapidly growing private company focused on high-tech electronics like servers and networking equipment.
CTA: Telecom industry in India
What are the main products, except mobile phones, that are manufactured by EMS companies?
While mobile phones currently dominate the market (around 45%), Indian EMS companies are expanding their offerings into other areas:
- Automotive electronics: Parts for cars and other vehicles.
- Industrial electronics: Components used in industrial automation processes.
- Wearables: Smartwatches, fitness trackers, and other wearable devices.
How is the government supporting this industry?
India has witnessed a surge in the focus of the central and state governments in the overall development of the electronics ecosystem. In 2012, the first National Policy on Electronics (MPE) was implemented to offset shortcomings in the Indian electronics industry. Following that, in 2016, the government prepared a phased roadmap to promote the domestic manufacturing of mobile phones. In 2019, the GoI revamped the National Policy on Electronics, adopting an integrated approach to build India’s capacity in the core tech department.
Is there a place for small and medium-sized enterprises (SMEs) in the Indian EMS sector?
Yes, SMEs can play a vital role in the EMS ecosystem:
- Supplier network: SMEs can act as suppliers of components and sub-assemblies to larger EMS companies.
- Niche markets: SMEs can cater to niche markets requiring smaller production volumes or specialised products.
- Innovation: Smaller companies often have the agility to innovate and develop new technologies that can be adopted by the industry.
CTA: What is a business loan for MSME
What are some challenges that the sector faces?
Limited control: A major limitation is the dominance of contract manufacturing. Indian companies primarily assemble products based on specifications provided by global brands, leaving limited control over design and intellectual property.
Global giants: India still faces stiff competition from established EMS giants like China and Vietnam, which have well-developed ecosystems, lower labour costs in some segments, and established infrastructure.
Growth constraints: SMEs, which can play a vital role in the sector, might face difficulties accessing capital for expansion and technology upgrades. This limits their ability to compete effectively.
How can AI be used in this sector to aid growth?
AI algorithms can analyse production data to identify bottlenecks and optimise workflows, leading to increased efficiency and reduced downtime. AI can also predict potential equipment failures, allowing for preventive maintenance and minimising production disruptions.
