As part of the China+1 strategy, India is positioning itself as an alternative manufacturing destination from which global multinationals can source, mainly from the US.
As part of the China+1 strategy, India is positioning itself as an alternative manufacturing destination from which global multinationals can source, mainly from the US.
Tamil Nadu has emerged as a major hub for electronics and electronic manufacturing services (EMS), with the region recognized as a key segment for policy focus for India.
According to analysts, several EMS companies have set up factories in Sriperumbudur and Tambaram regions for indigenous manufacturing, contributing to the state’s leadership in this sector.
As a sign of the state’s dominance in this segment, three Chennai-based companies are seeking to raise or raise funds through an initial public offering (IPO).
These include Bharat FIH (Foxconn Technology Group Company), which is planning to raise around ₹5,003.8 crore; Avalon Technologies (₹1,025 cr) and Shrima SGS Technologies which are currently in the market to raise ₹825 cr.
According to a Frost & Sullivan (F&S) report, the bullish element on EMS comes from the fact that about $300 billion has been set aside for the Indian government’s PLI (Production Linked Incentive) plan over the next five years.
The PLI plan is expected to increase production by about $520 billion over the next five years, the F&S report said. The scheme provides an average of 5% of the output as incentive.
As part of the China+1 strategy, India is positioning itself as an alternative manufacturing destination from which global multinationals can source, mainly from the US.
According to the F&S report, India has risen significantly in the global rankings to become a preferred investment destination for EMS. The National Policy on Electronics (NPE) emphasized on local value addition and created an enabling environment.
As per the F&S report, the total addressable EMS market in India was valued at $45 billion in FY2012, which is expected to grow to $101 billion in FY26 with a CAGR of 22.1%.
Indian EMS companies contributed about 43.5% ($20 billion) in FY 2012. It is expected to grow at a CAGR of 32.3% to reach $60 billion by FY26. The Indian EMS industry accounts for a little over 2% of the global EMS market.
According to the F&S report, in FY22, domestic electronics production is estimated to be $86 billion, which includes domestically manufactured electronics components worth $12 billion and imported components worth $18 billion.
The size of the EMS market for mobile phones is estimated to grow from Rs 91,200 crore in FY 2012 to Rs 2,72,300 crore by FY 26, at a CAGR of 31.5% as per Frost & Sullivan research.
The EMS business of Electric Vehicles in India is estimated to grow from Rs 600 crore in FY 2012 to Rs 7,600 crore by FY 26 at a CAGR of 86.8%.
The EMS business of television is estimated to grow from Rs 6,300 crore in FY22 to Rs 18,600 crore by FY26, at a CAGR of 30.9%.
The EMS business of wearables is expected to grow from ₹200 crore in FY22 to ₹2,000 crore by FY26. and EMS business of telecom and networking products is estimated to grow from ₹5,700 crore in FY22 to ₹10,900 crore by FY26, at a CAGR of 17.8%.
While the IT Hardware EMS business is estimated to grow from Rs 4,500 crore in FY 2012 to Rs 31,400 crore by FY 26 at a CAGR of 62.6%, the EMS business of Mechanics is expected to grow from Rs 2,000 crore in FY 2012 to . 6,400 crore at a CAGR of 33.3% till FY26, according to Frost & Sullivan research.