India’s Electronics Manufacturing Services (EMS) sector is undergoing rapid transformation, positioning the nation as a crucial global electronics hub. Driven by robust government policies, a vast domestic market, global supply chain shifts (“China+1”), and growing technological capabilities, the sector is evolving from an assembly base into a sophisticated manufacturing ecosystem. Projections indicate robust double-digit growth, fueled by domestic consumption and rising exports, making EMS vital for India’s ambition to become a $1 trillion digital economy and a global electronics manufacturing powerhouse.
Defining EMS & Its Significance
Electronics Manufacturing Services (EMS) providers offer comprehensive, end-to-end solutions for Original Equipment Manufacturers (OEMs), encompassing everything from design and component sourcing to Printed Circuit Board Assembly (PCBA), full product manufacturing, and logistics. This collaborative model empowers OEM brands to concentrate on their core competencies of innovation and brand development, while simultaneously capitalizing on the scale, efficiency, and specialized expertise offered by EMS providers. For India, the development of a robust EMS sector holds significant strategic importance, as it is crucial for reducing the nation’s substantial electronics import dependency, fostering high-value export opportunities, generating large-scale employment across various skill levels, facilitating technology absorption to enhance domestic research and development capabilities, and ultimately supporting the broader ‘Digital India’ initiative by making electronics more accessible and affordable for its citizens.
Current Market Size & Trajectory
The global Electronics Manufacturing Services (EMS) market is experiencing significant expansion, with projections indicating a growth of USD 188 billion between 2025 and 2029 (Technavio), ultimately reaching an impressive USD 1,119.92 billion by 2032 (Fortune Business Insights). Amidst this global growth, India is emerging as one of the fastest-growing EMS markets worldwide. India’s overall electronics manufacturing market is anticipated to reach USD 500 billion by 2030 (IBEF, EY), while its dedicated EMS market is poised for a compound annual growth rate (CAGR) exceeding 17% from 2024 onwards, substantially surpassing the global average (JPM, Technavio, EY). This robust growth is further underscored by a remarkable surge in electronics exports, which crossed USD 29.1 billion in FY24 (IBEF), largely propelled by the success of mobile phone manufacturing under the Production-Linked Incentive (PLI) scheme.
Key Growth Drivers
A significant driver is the Government Policy Thrust, notably the Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing and IT Hardware, which provides substantial financial incentives (4-6% on incremental sales). This scheme has been highly effective in attracting global players like Foxconn, Pegatron, and Flex, while simultaneously bolstering domestic champions. Complementing this, national initiatives such as “Make in India” and “Atmanirbhar Bharat” are actively promoting domestic manufacturing, thereby cultivating a favorable environment for the EMS industry.
The sector also benefits from Burgeoning Domestic Demand, as India possesses the world’s second-largest smartphone user base, alongside rapidly expanding markets for IT hardware, consumer electronics, industrial, automotive, and medical devices. This demand is further fueled by rising incomes and widespread digitalization. Furthermore, Global Supply Chain Realignment, often referred to as the “China+1” strategy, is playing a crucial role. Geopolitical shifts and disruptions caused by the pandemic are prompting global OEMs to diversify their manufacturing bases away from China, positioning India as a prime beneficiary due thanks to its vast domestic market, strong democratic credentials, and continually improving infrastructure. India’s Cost Competitiveness, characterized by competitive labor costs, a large skilled workforce, and increasing operational efficiencies, further enhances its appeal. Finally, ongoing Infrastructure Development, including investments in industrial corridors, dedicated electronics manufacturing clusters (EMCs), and significant logistics improvements, is creating a more conducive ecosystem for electronics manufacturing.
Key Application Segments Driving Growth
IT Hardware, encompassing laptops, tablets, and servers, is rapidly gaining momentum with the introduction of PLI 2.0, successfully attracting global Original Equipment Manufacturers (OEMs) and demonstrating substantial export potential. The Consumer Electronics segment, including televisions and appliances, caters to a vast domestic market, with local manufacturing growing steadily, further supported by PLI incentives. Growth in Industrial Electronics is primarily driven by ongoing factory modernization efforts and significant infrastructure development across the country. Automotive Electronics stands out as one of the fastest-growing segments, fueled by the burgeoning Electric Vehicle (EV) market, advancements in Advanced Driver-Assistance Systems (ADAS), and increasingly sophisticated infotainment systems, all demanding high reliability. The Medical Electronics segment is also experiencing significant growth, propelled by expanding domestic healthcare needs and strong export potential. Finally, Strategic Electronics, covering defense, aerospace, and space applications, is witnessing increased manufacturing activity, largely driven by the nation’s strong focus on indigenization.
Persistent Challenges
A major hurdle is the Component Ecosystem Gap, characterized by a heavy reliance on imported components such as semiconductors, displays, and PCBs, resulting in limited local value addition (currently around 18-20% for smartphones). Developing a robust, deep-tier domestic supplier base is therefore critical. Furthermore, Infrastructure Deficiencies persist, with ongoing gaps in reliable power, water, logistics, and specialized industrial infrastructure, all of which impact operational efficiency and global competitiveness. The Cost of Finance & Working Capital also presents a constraint, particularly for Micro, Small, and Medium Enterprises (MSMEs) struggling with access to affordable capital. A significant Skill Gap exists, necessitating continuous upskilling in advanced manufacturing techniques, Surface Mount Technology (SMT) operations, quality control, design engineering, process engineering, and supply chain analytics to meet evolving industry demands. Navigating Regulatory Complexity & Compliance can be burdensome for businesses. Lastly, the Indian EMS sector faces intense competition from established global EMS hubs like Vietnam, Thailand, and Mexico, which possess mature ecosystems and competitive advantages.
Future Outlook & Strategic Imperatives
Key trends driving this growth include: Value Chain Integration, where players are increasingly moving into higher value-add activities such as design, product development, and component manufacturing, alongside potential entry into OSAT (Outsourced Semiconductor Assembly and Test). This is complemented by Geographical Diversification, with manufacturing expanding beyond traditional hubs to states like Karnataka, Telangana, Uttar Pradesh, and Gujarat. Technology adoption is also on the rise, with increased automation, the integration of AI/ML in manufacturing processes, and the use of IoT for factory monitoring. Furthermore, a growing Sustainability Focus is prompting the adoption of green manufacturing practices and circular economy principles. Finally, the ongoing Nearshoring Momentum, driven by “China+1” and “Europe+1” strategies, continues to position India as a prime beneficiary for global supply chain diversification.
Conclusion
The challenges in component ecosystem development, infrastructure, and skills require persistent focus, India is rapidly ascending the global electronics manufacturing value chain. The EMS sector is the critical engine powering this ascent, fostering job creation, export growth, technological self-reliance, and securing India’s position as a global electronics hub. Continued collaboration across government, industry, and academia is vital to realize this sector’s immense potential.