India's Electronic Manufacturing Services (EMS) Opportunity: Strategic Transformation from Capacity Expansion to Value Chain Deepening

Global Supply Chain Reset: The Window of Opportunity for India's EMS

The Electronic Manufacturing Services (EMS) industry is undergoing a structural transformation. The traditional single-efficiency optimization model centered on China is gradually disintegrating due to geopolitical tensions, trade policy fluctuations, and supply chain disruptions. Global OEMs are prioritizing resilience, redundancy, and geographic diversification, driving the evolution of manufacturing networks towards multi-hub configurations—distinct advantages are emerging in regions such as Southeast Asia, India, and Mexico. The role of EMS is also shifting from contract manufacturing executor to strategic partner, assisting in the design and management of risk-diversified supply systems.

In this changing landscape, India stands out as one of the most promising emerging manufacturing destinations, supported by policy incentives, expanding domestic demand, and rising export competitiveness.

Scale Leap: A Fourfold Growth Trajectory in Five Years

India's EMS industry has experienced unprecedented expansion. According to a KPMG report, its market size surged from approximately $10-12 billion in FY20 (fiscal year 2020) to $40-45 billion in FY25 (fiscal year 2025). This accelerated growth has been fueled by the Production-Linked Incentive (PLI) scheme, a surge in domestic electronic consumption, and deep integration with global export supply chains.

However, despite rapid growth, India's EMS output accounts for only 5%-6% of the global total. This share reflects both vast room for expansion and its peripheral position in the global value chain—scale has been accumulated, but depth remains insufficient.

Structural Concerns: A Value Gap Behind the Scale

India's EMS capacity expansion has been primarily concentrated in low-value segments of mobile phones and consumer electronics: printed circuit board assembly (PCBA) and basic final product assembly. Meanwhile, high-value activities such as design-led manufacturing (ODM/JDM), advanced electronics, and precision engineering are still in their infancy.

Positively, some domestic EMS companies have begun to venture into complex areas such as automotive electronics, industrial systems, and telecom infrastructure, signaling initial attempts at value chain deepening. But overall, India's competitiveness in high-end manufacturing remains far behind mature hubs like China and Vietnam.

Structural Constraints: Import Dependence and Ecosystem Gaps

India faces three major bottlenecks in its climb towards high-complexity manufacturing.

Component Import Dependency: 60%-90% of core materials such as semiconductors, displays, PCBs, and passive components rely on imports, leading to high bill-of-materials costs and vulnerability to external shocks.

Infrastructure Gaps: Logistics efficiency, certification systems, and manufacturing productivity all lag behind China and Vietnam, eroding cost competitiveness.

Talent and Technology Gaps: Insufficient adoption of advanced manufacturing technologies (e.g., Industry 4.0) and a weak pool of R&D and design talent.

Although the government has set a target to raise domestic value addition to around 40% by 2030, achieving this goal requires coordinated ecosystem building—far beyond the reach of any single policy.

Future Path: From Capacity-Driven to Capability-Led

• The next phase for India's EMS must involve a strategic shift: from incentivizing capacity expansion to building deep, sustainable capabilities. The specific path includes:- Localized Component Ecosystem: Attract upstream investments in semiconductors, panels, etc., to reduce import dependency.
• Advanced Manufacturing Investment: Promote the deployment of automation, digitalization, and smart factories.
• Strengthened R&D and Design: Cultivate ODM/JDM capabilities and encourage local enterprises to pursue technological innovation in high-value areas.
• Skill Upgrading: Train the workforce according to Industry 4.0 standards to enhance productivity and quality levels.