India's EMS sector poised for long term growth amid localisation push, value-added manufacturing: Report
New Delhi, June 12
Despite weak demand in consumer electronics, 360 ONE Capital remains optimistic about the long-term growth of India's electronic manufacturing services sector, citing increasing localisation, semiconductor opportunities and a shift towards value-added manufacturing.
In a sector update report, the brokerage said the industry is undergoing a structural transformation that is expected to support growth in the years ahead.
"We remain positive on the structural growth story of the sector, with themes such as increasing RAC penetration, backward integration, value-added manufacturing, semiconductors, etc., providing a strong runway for growth," the report said.
According to the report, the Indian EMS industry is gradually moving beyond basic assembly operations and expanding into higher-value manufacturing activities.
"There is a structural shift underway in the Indian EMS sector, from being a mere manufacturer/assembler to becoming a value-added player through backward integration into components and value-added manufacturing of PCBs and OSAT," it said.
The brokerage also highlighted the role of government policies in strengthening the domestic electronics manufacturing ecosystem.
"The government's push to make India self-reliant and a global manufacturing hub is evident from policy initiatives such as ECMS, ISM 2.0, etc. These supportive policies are expected to lay a strong foundation for the industry in the years ahead, enabling players to undertake increasingly complex manufacturing activities," the report said.
The positive outlook comes even as parts of the consumer EMS segment witnessed demand pressures in the fourth quarter of FY26.
"The Electronic Manufacturing Services (EMS) sector continued its growth trajectory, albeit at a lower pace as the consumer EMS space witnessed subdued growth/de-growth, whereas industrial EMS companies continued to see strong growth," the report noted.
The brokerage attributed weakness in consumer electronics manufacturing to slower demand for mobile phones and cooling products.
"Weak growth... was attributable to subdued demand for mobile phones, driven by a sharp increase in prices resulting from a supply crunch in memory chips," the report said.
— ANI
Reader Comments
I'm cautiously optimistic about this. The policies like ECMS and ISM 2.0 are promising, but we need to ensure that the benefits reach small and medium enterprises too. Also, the supply chain for memory chips needs more attention. We can't rely solely on imports for such critical components. Good to see the government focusing on this though.
Finally some realistic outlook! The consumer segment has been struggling with high prices - my last phone cost almost double what I paid in 2020. But industrial EMS showing strong growth is a good sign. Semiconductor opportunities will be a game changer if we play our cards right. But please, no more delays in policy implementation!
This is a positive sign for investors. The shift from mere assembly to value-added manufacturing (PCB, OSAT) shows maturity in the Indian ecosystem. However, we need to watch out for geopolitical risks and ensure we have alternative supply chains. Also, R&D investment from private players needs to pick up - not just government push. Let's see if FY27 brings better execution.
The report highlights important trends - backward integration and semiconductor focus. But I'm concerned about the 'subdued demand in mobile phones' part. We are the world's second largest smartphone market and if prices are rising due to chip shortages, that's a red flag. The government should incentivise local chip manufacturing faster. Also, ACs and cooling products - please make them affordable for middle class families!
As someone working in the electronics sector, I can confirm this shift is real. Tier-2 cities are seeing new EMS plants coming up, which is creating jobs locally. But we need
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