Electronics cos charged up for big revenue boost, set to double revenues to $55 billion by FY2027

India’s domestic electronics manufacturing services (EMS) industry revenues are set to more-than-double to reach $55 billion by FY2027, driven by increased sourcing of components locally, with Apple, Samsung, Lenovo and other global companies expected to expand their presence in India.

A BNP Paribas report expects Apple to expand its investment to $40 billion in the next 4-5 years to significantly increase its production capacity in India, while Korean major Samsung is looking to expand its manufacturing presence by producing laptops, in addition to smartphones.

The report added that IT hardware major Lenovo is planning to make servers in India to support its growing data centre business, leveraging the production-linked incentive (PLI) scheme for IT hardware. Other global companies such as Acer, HP, and Nokia are also expanding their presence in India, BNP Paribas said.


According to the report, the total addressable market for domestic EMS players, estimated to be at $40 billion as of FY23, is expected to grow at 27% CAGR to reach $100 billion by FY27 on the back of declining import of finished goods (at 3% CAGR), and growing component production — currently growing at 13% CAGR — to surge to 19% CAGR in FY23-27.

“While the pace of imports of finished goods (particularly mobiles, TVs, and ACs) has slowed in recent years, the electronics industry remains dependent on imports, especially for consumer and industrial electronics components, IT hardware and LED components,” the report said.

The report said the electronic manufacturing industry in India, which saw its aggregate revenue rapidly expanding from $25 billion in FY2013 to $100 billion in FY2023 on the back of lower value-added manufacturing capabilities and various government initiatives such as customs duties on imported finished goods and production-linked incentive schemes is set to account for a growing proportion of global revenues estimated to be at around $900 billion as of CY2031.

Industry executives ET spoke to said policy continuity will be essential to sustain the momentum of growth, along with rolling out new initiatives such as a PLI scheme for components and wearables.

“For India to become a key player in the global value chain (GVC) in electronics sector, we need a mission-mode approach, with clear goals and timelines to quadruple the sector's output in the next five years. This ambitious target will require coordinated efforts across multiple ministries and continuous engagement with industry leaders,” said Pankaj Mohindroo, chairman, India Cellular and Electronics Association, adding that a predictable regulatory environment ensuring ease of doing business is essential to foster growth and innovation.

“We must make our nation the best location to do business for GVCs. Simultaneously, we must build champion Indian companies. An appropriate PLI for components and sub-assemblies as well as wearables and hearables will drive domestic value addition and attract new investments,” Mohindroo said.

The industry has proposed a Rs 30,000-35,000 crore PLI scheme for components and sub-assemblies, along with capital expenditure support in a bid to boost domestic value addition to 35-40% from 18% currently.

President of India Electronics and Semiconductor Association Ashok Chandok said the new government should now take up and evaluate the proposals to set up semiconductor fabs and continue to provide financial support and incentives to the industry. He said there should now be a focus on creating a component ecosystem championing local product design through R&D and support the sector with the skills required through country-to-country knowledge transfer agreements.