Tamil Nadu has emerged as a major hub for electronics and Electronic Manufacturing Services (EMS) with the recognition of the sector as a key segment for policy focus for India.
Several EMS companies have set up factories in the Sriperumbudur and Tambaram areas for indigenous manufacturing, contributing to the State’s leadership in this segment, according to analysts.
As a sign of the State’s dominance in this segment, three Chennai-based companies are seeking to raise or raising funds through initial public offerings (IPOs).
These include Bharat FIH (Foxconn Technology Group company) which is planning to raise about ₹5,003.8 crore; Avalon Technologies (₹1,025 crore) and Sryma SGS Technology which is currently in the market to raise ₹825 crore.
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 Government of India’s PLI (Production Linked Incentive) scheme over the next five years.
The F&S report states that PLI scheme is expected to result in an increase in production of approximately $520 billion over the next five years. The scheme provides an average of 5% of production as an incentive.
As part of China+1 strategy, India is positioning itself as an alternate manufacturing destination from where global MNCs mainly from the U.S. can source.
As per F&S report, India has risen significantly in the global rankings to become a favoured investment destination for EMS. The National Policy on Electronics (NPE) emphasised local value addition and created an enabling environment.
According to the F&S report, the total addressable EMS market in India was valued at $45 billion in FY22 which is is expected to grow to $101 billion in FY26 with a CAGR of 22.1%.
Contribution of Indian EMS companies is about 43.5% ($20 billion) in FY22. This is expected to grow at 32.3% CAGR to reach $60 billion by FY26. The Indian EMS industry accounts for little above 2% of the global EMS market.
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, as per F&S report.
The EMS market size for mobile phones is estimated to grow from ₹91,200 crore in FY22 to ₹2,72,300 crore by FY26 at a CAGR of 31.5% as per Frost & Sullivan research.
Electric Vehicles‘ EMS business in India is estimated to grow from ₹600 crore in FY22 to ₹7,600 crore by FY26 at CAGR of 86.8%.
Televisions’ EMS business is estimated to grow from ₹6,300 crore in FY22 to ₹18,600 crore by FY26 at CAGR of 30.9%.
Wearables/Hearables’ EMS business is estimated to grow from ₹200 crore in FY22 to ₹2,000 crore by FY26. and Telecom and Networking Products’ EMS business 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 ₹4,500 crore in FY22 to ₹31,400 crore by FY26 at a CAGR of 62.6%, the Mechanics’ EMS business is estimated to grow from ₹2,000 crore in FY22 to . ₹6,400 crore by FY26 at a CAGR of 33.3% as per Frost & Sullivan research.
