India's Electronic Manufacturing Services (EMS) opportunity

The traditional EMS model, anchored heavily in China and optimised predominantly for cost efficiency, is being fundamentally reshaped. Geopolitical tensions, trade policy shifts, and supply chain disruptions have forced global OEMs to prioritise resilience, redundancy, and geographical diversification. As a result, manufacturing is increasingly being distributed across multiple hubs – including Southeast Asia, India, and Mexico – each offering differentiated value propositions. EMS players are evolving from pure-play contract manufacturers into strategic partners, helping OEMs design and manage diversified, risk-mitigated supply chains while maintaining operational flexibility and speed to market.

India’s EMS sector has witnessed unprecedented expansion, growing from approximately USD 10–12 billion in FY20 to USD 40–45 billion in FY25. This acceleration has been underpinned by government-led initiatives such as the Production Linked Incentive (PLI) scheme, rising domestic electronics consumption, and increasing integration into global export supply chains. Despite this rapid growth, India still accounts for only 5–6 per cent of global EMS output – highlighting significant headroom for further expansion. As OEMs seek alternative manufacturing bases and India continues to strengthen its export capabilities, the country is well-positioned to emerge as one of the fastest-growing EMS hubs globally.

While India has successfully established large-scale manufacturing capacity, particularly in mobile phones and consumer electronics, its presence remains concentrated in lower-value segments such as printed circuit board assembly (PCBA) and basic box-build. Higher-value activities – including design-led manufacturing (ODM/JDM), advanced electronics, and precision engineering – are still in early stages of development. Encouragingly, select domestic EMS players are beginning to expand into more complex segments such as automotive electronics, industrial systems, and telecom infrastructure, indicating the initial shift toward value-chain deepening.

India’s ability to compete in high-complexity manufacturing is constrained by structural gaps across the ecosystem. A significant challenge is the heavy reliance on imported components, with 60–90 per cent of bill-of-materials sourced externally across semiconductors, displays, PCBs, and passive components. Additionally, gaps in logistics efficiency, certification infrastructure, and manufacturing productivity relative to established hubs such as China and Vietnam continue to hinder competitiveness. While government initiatives aim to raise domestic value addition to ~40 per cent by 2030, achieving this target requires coordinated, large-scale ecosystem development.

India’s next phase of EMS evolution requires a strategic pivot – from incentivising capacity creation to building deep, sustainable capabilities. This includes developing local component ecosystems, investing in advanced manufacturing technologies, strengthening R&D and design capabilities, and building a skilled workforce aligned to Industry 4.0 requirements. Policymakers should prioritise infrastructure, certification ecosystems, and targeted incentives for high-value segments, while domestic players should focus on design integration, segment prioritisation, and strategic acquisitions. Global OEMs, in turn, should accelerate supply chain diversification by embedding India into their long-term manufacturing strategies. The decisions taken today determine whether India emerges as a global leader in high-complexity electronics manufacturing or remains a scale-driven assembly hub.