India’s electronic manufacturing landscape is on the verge of a significant surge, with a forecasted share of approximately 7% in the global Electronics Manufacturing Services (EMS) industry by financial year 2027. According to analysts, this growth is fueled by a combination of favorable government policies, cost competitiveness, robust infrastructure, and a skilled labor force.
Government Policies Driving Growth
Government initiatives like the Production Linked Incentive (PLI) and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) have played a pivotal role in accelerating India’s manufacturing and export capabilities. Additionally, the imposition of import duties aimed at boosting component manufacturing is expected to drive further expansion.
Strategic Shifts and the “China+1” Strategy
The adoption of the “China+1” strategy has become a catalyst for India’s manufacturing sector, especially in the Electronics Manufacturing Services (EMS) industry. JM Financial forecasts indicate a substantial increase in India’s share from 2% in FY21 to around 7% by FY27, signaling a remarkable trajectory.
Rapid Growth in PCB Assembly Market
The Printed Circuit Board Assembly (PCBA) market in India is anticipated to witness a remarkable compound annual growth rate (CAGR) of around 39% from FY22 to FY26. As of FY23, the market, excluding mobile phones, stood at approximately Rs 80,000 crore. The top five players, with a combined revenue of about Rs 5,870 crore, still have room for market expansion.
Multi-Layer PCBs on the Rise
India’s manufacturing landscape has experienced a notable shift with the increased adoption of multi-layer Printed Circuit Boards (PCBs). The percentage has risen from 6% in FY19 to over 55% in FY23, showcasing the industry’s adaptability and growth potential.
Venturing into Semiconductor Value Chain
India is strategically positioning itself to climb the semiconductor value chain, targeting the Rs 100,000 crore Indian Outsourced Semiconductor Assembly and Test (OSAT) opportunity. Government incentives, including a 75% capital subsidy, are expected to drive investments in this sector.
Key Players and Investment Recommendations
- Kaynes Technology India Ltd:
- Value addition and OSAT venture.
- JM Financial recommends buying with a target price of Rs 3,410.
- Syrma SGS Technology Ltd:
- Leader in RFID, exploring OSAT.
- ‘Buy’ rating with a target price of Rs 675.
- Cyient DLM Ltd:
- OSAT venture expected within 1-2 years.
- ‘Buy’ rating with a target price of Rs 925.
- Avalon Technologies Ltd:
- Focusing on domestic opportunities.
- Recommended for buying with a target price of Rs 620.
As India positions itself as a global player in electronic manufacturing, strategic investments in key players are expected to yield fruitful returns.
