Supported by strong government initiatives, a survey released on Monday indicated that the domestic electronic manufacturing services (EMS) market is expected to expand at a 32% compound annual growth rate (CAGR) between FY22 and FY27, reaching $72.2 billion from $17.5 billion in FY22.
To encourage electronic manufacturing in the nation, the government has launched a number of initiatives, including the Semicon India program and production-linked incentive (PLI) schemes.
In an effort to draw in more capital, the center has also reopened the PLI program for white goods, or household appliances.
According to the report by Motilal Oswal Financial Services, to further boost localisation and value addition in India, additional initiatives will be necessary to promote component manufacturing in the country, where the government is already working on various schemes.
“Component manufacturing has not shown the same growth as it requires an upfront initial capex and has lower asset turnover ratios with a gestation period of 1-2 years from investment to production. Hence, industry is seeking more initiatives from government to boost component manufacturing in India,” the report mentioned.
A number of initiatives have been suggested by Niti Aayog to strengthen component production, India’s standing in the global electronics manufacturing market, and the nation’s integration into global value chains (GVC).
These include tax breaks for producing components, rewards for R&D spending, simplified tariffs, soft infrastructure programs, facilitation of tech transfer, and establishment of industrial infrastructural zones.
Companies like as Dixon Technologies and Amber Enterprises (BUY) in the EMS sector have become market leaders in their respective areas and are now focusing on backward integration and segment expansion.
The manufacturing of electronics increased from $48 billion in FY17 to $101 billion in FY23 as a result of several government initiatives.
By FY2030, it is expected that India’s capacity for producing electronic goods will exceed $500 billion ($350 billion for finished goods and $150 billion for components). This would require large investments in improving the ecosystem for componentry.
Assemblers and original equipment manufacturers (OEMs) in the electronics value chain, including Foxconn, Dixon, Amber, Pegatron, Apple, Samsung, BoAt, and Atomberg, are among those with a strong presence and capability in the nation, according to the research.
According to the paper, “a few companies are initiating a progress on component manufacturing that will evolve more in the coming years.”
