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India's EMS Sector to Grow Rapidly with Rs 9,000 Crore Capex

Government subsidies and aggressive expansion plans are fueling India's electronics manufacturing services sector. Key players are investing heavily in new products and components to reduce import dependence.

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India's EMS Sector to Grow Rapidly with Rs 9,000 Crore Capex

India's electronics manufacturing services (EMS) sector is poised for significant growth, with leading companies planning substantial capital expenditure. Jefferies estimates combined capex to reach approximately Rs 9,000 crore between FY25-FY28, more than doubling from the previous period.

Key players like Dixon Technologies, Amber Enterprises, and Syrma SGS are financing their expansion through capital market fundraisings and technology licensing costs. Dixon Technologies, for instance, has raised substantial funds through capital markets in recent years. Amber Enterprises is investing heavily in multi-layer and high-density interconnect PCBs, backed by a joint venture providing technology and initial demand assurance.

Government incentives are playing a crucial role in making these projects financially viable. Subsidies cover a significant portion of project costs for some companies. The sector is entering a decisive phase, with aggressive backward integration into component manufacturing supported by these incentives.

Companies are expanding their portfolios. Dixon Technologies is focusing on display modules, camera components, and lithium-ion batteries, including a stake in Q Tech India. Syrma SGS is building capabilities in various types of PCBs through joint ventures with Korean and Italian partners. Kaynes Technology has emerged as an early mover in semiconductors, with a large-scale OSAT facility under the India Semiconductor Mission in partnership with Malaysia's Globetronics. All four leading EMS companies - Amber Enterprises, Dixon Technologies, Kaynes Technology, and Syrma SGS - are undertaking significant capital expenditure to reduce import dependence and expand up the value chain.

Jefferies maintains a positive outlook on the Indian EMS sector, with Buy ratings for Amber Enterprises, Kaynes Technology, and Syrma SGS, and a Hold rating for Dixon Technologies. As these companies continue to invest and expand, the sector is expected to play a pivotal role in India's manufacturing growth story.

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