For years, India’s electronics manufacturing story could be told through a relatively simple picture: products arrived, components came in, factories assembled them, and finished products went out.
That model helped India build scale, attract global manufacturers and establish itself as an increasingly important destination in the global electronics supply chain. But something more interesting is now happening beneath that familiar story. India’s Electronics Manufacturing Services (EMS) industry is beginning to move beyond the assembly line.
The next phase is likely to be about manufacturing more of the electronics itself. That means producing more components, printed circuit boards, sophisticated multilayer and HDI boards, automotive and industrial electronics, and semiconductor packaging and testing. Ultimately, the goal is to create a deeper domestic ecosystem capable of capturing a larger share of the value generated by every electronic product manufactured in the country.
This is an important distinction. An electronics industry can become very large without necessarily becoming very deep. India’s challenge now is to build both scale and depth.
From Assembly to a Bigger Electronics Opportunity
India’s EMS industry remains much smaller than China’s, but its growth trajectory has been considerably faster. The industry is estimated at around US$ 55 billion to US$ 60 billion, with growth of roughly 30-35%. On the other hand, China has a much larger base but is expanding at a slower rate.
These numbers explain why EMS has become such an important part of India’s manufacturing conversation. Yet the headline growth rate is only the beginning. The more important question is what exactly India will manufacture as the industry expands.
For much of the past decade, mobile phones and consumer electronics have been central to India’s EMS growth. They created enormous production volumes and enabled manufacturers to develop the ability to operate large factories, manage complex supply chains, and meet the demanding quality and delivery requirements of global customers.
That experience matters. Scale matters. But scale is not the same as value addition. If the next phase of India’s EMS industry simply means assembling larger volumes of products using imported components, the country will capture only part of the economic opportunity. The bigger prize lies in moving deeper into the product, and that transition has already begun.
EMS companies are increasingly looking beyond mobile phones and traditional consumer electronics towards automotive, electric vehicles, industrial electronics and smart infrastructure. These sectors require greater engineering capability, specialized manufacturing and tighter quality standards. They can also offer better margin opportunities than conventional consumer electronics.
The result is a fundamental shift in the EMS business model. The question is no longer simply, “How many units can you manufacture?” It is becoming, “How much capability can you bring into each unit you manufacture?”
The Automotive and Industrial Shift
The next wave of EMS growth could increasingly come from products that consumers do not necessarily see. Electric vehicles contain electronics across their architecture. Industrial equipment depends on electronic control systems, while smart infrastructure requires sensors, controllers and communication systems. Automotive systems, meanwhile are becoming progressively more software and electronics-intensive.
This creates an enormous opportunity for EMS companies. The attraction is not simply the size of these markets, but their complexity. Consumer electronics often compete on enormous volumes, rapid product cycles and intense price pressure. Automotive and industrial electronics, by contrast require specialized manufacturing, stringent quality standards and long-term relationships between manufacturers and customers. The economics can therefore look very different.
The margin gap between consumer electronics and segments such as automotive, EV and industrial electronics is an important reason for this shift. Industrial applications, in particular can offer significantly higher potential margins than traditional consumer-facing products.
Diversification is consequently becoming a central strategy for EMS companies. A manufacturer that depends heavily on one product category remains exposed to that category’s cycles. A company capable of serving consumer electronics, automotive, industrial systems, wearables and other specialized applications has more opportunities to balance fluctuations in demand.
Diversification, in other words is no longer simply defensive. It can become a growth strategy in its own right.
Then Comes the PCB Question
There is one part of the electronics value chain that deserves considerably more attention than it usually receives: the printed circuit board.
To consumers, a PCB is almost invisible. To an electronics manufacturer, it is fundamental. The distinction between a PCB and a PCBA is particularly important when discussing India’s manufacturing ambitions. A PCB is the board itself, while a PCBA refers to the assembly of electronic components onto that board.
India has built significant capability around electronics assembly. However, a deeper manufacturing ecosystem requires greater domestic capacity to produce the boards and components that underpin that assembly process.
The industry is beginning to move in that direction. The scale of India’s PCB opportunity is substantial, particularly because a significant proportion of the country’s PCB requirements are currently imported. Several companies are investing in domestic PCB manufacturing capacity as part of broader backward-integration strategies.
That development is strategically important. The more components a manufacturer imports, the more exposed it remains to external supply chains, logistics costs, currency movements and global disruptions. Domestic PCB production will not eliminate those risks overnight. But it can begin to reduce them while improving control over quality, production planning and delivery schedules.
The opportunity is also not limited to basic boards. The more important question is whether India can build capacity in increasingly sophisticated PCB technologies.
Why Advanced PCBs Are Critical to India’s EMS Future
Not all PCBs are created equal. As electronic products become smaller, more powerful and more densely packed, the demands placed on circuit boards become increasingly complex.
Multilayer and HDI or High Density Interconnect technologies enable manufacturers to accommodate more complex electronic designs within compact spaces. These capabilities are particularly important in applications such as electric vehicles, smartphones, wearables and other advanced electronic products.
Growing investment in higher-complexity PCB manufacturing is therefore an important development for India’s EMS industry. This is where the EMS story begins to evolve into a technology story.
Moving from assembly into sophisticated PCB manufacturing requires different equipment, advanced processes, engineering expertise and robust quality systems. Localization is not simply about replacing an imported product with a domestically manufactured version. It is about building the capability to manufacture products that meet increasingly demanding technical specifications.
That is a much harder challenge, but also a much more valuable one.
India’s ability to manufacture advanced PCBs at scale could become a meaningful differentiator for its EMS industry. It would allow manufacturers to respond more quickly to customer requirements, strengthen supply-chain resilience and capture more value from each product.
Backward Integration Could Become the Real Competitive Advantage
The phrase “backward integration” increasingly deserves a central place in discussions about India’s EMS industry. The concept is straightforward.
Consider an EMS company that assembles an electronic product but imports most of the critical components required to build it. Now consider another company that performs the assembly but also manufactures some of its own components, produces PCBs, performs testing and adds specialized capabilities around the product.
Both companies are manufacturers, but the second controls more of the value chain. It may have greater control over quality, supply, production planning and technology. It may also be less dependent on external suppliers and better positioned to respond to customer requirements.
That is why PCB manufacturing and semiconductor-related capabilities matter so much. They are not isolated businesses being added to an EMS portfolio. They represent a movement deeper into the electronics value chain. PCB manufacturing and OSAT represent important opportunities for backward integration within India’s EMS ecosystem. Over time, these capabilities could prove more valuable than simply adding another assembly line.
OSAT Brings the Semiconductor Story Closer to EMS
India’s semiconductor ambitions are often discussed through the lens of chip fabrication. But the semiconductor ecosystem is much broader than fabs. One increasingly important area is OSAT or Outsourced Semiconductor Assembly and Testing. Packaging and testing are essential stages in converting semiconductor devices into usable components for electronic products.
India’s OSAT market is still at an early stage, but significant investments are being planned and developed. This creates another layer in the country’s electronics manufacturing ecosystem and connects two industries that have historically been discussed separately.
On one side is India’s rapidly expanding electronics manufacturing sector. On the other is the country’s emerging semiconductor ecosystem. OSAT sits somewhere between them. As these capabilities develop, the electronics manufacturing chain can become more integrated. Assembly can connect with components, components can connect with PCBs, and PCBs can connect with semiconductor packaging and testing.
Over time, these capabilities can generate demand for engineering, design, materials and specialized manufacturing services. That is how an ecosystem becomes deeper: not through a single investment, but through the gradual development of interconnected capabilities.
PLI Was the Catalyst, Competitiveness Will Be the Test
Government support has played a major role in India’s electronics manufacturing expansion. Production-linked incentives helped companies build scale and encouraged investment in domestic manufacturing.
But every incentive-led growth story eventually faces the same question: what happens when incentives become less important?
The benefits created by the PLI schemes may extend beyond the incentives themselves. Scale, improved efficiency, stronger supplier relationships and backward integration can continue to benefit manufacturers even as direct support reduces or expires. That argument will ultimately be tested by the market. Incentives can accelerate capacity creation, but they cannot permanently substitute for competitiveness.
Indian EMS companies will increasingly have to compete on manufacturing efficiency, engineering capability, quality, delivery reliability, technology and cost. This could mark one of the most important transitions in the industry’s history.
The first phase was about creating capacity. The next phase will be about proving capability.
Market Performance Is Not the Whole Industry Story
There is an important distinction between the performance of individual EMS companies and the long-term health of the industry as a whole.
A company’s share price or quarterly results may be affected by working-capital requirements, customer concentration, margin pressure, seasonal demand, raw-material costs or difficulties in executing expansion plans. These short-term challenges do not necessarily undermine the broader opportunity in electronics manufacturing.
At the same time, strong industry growth does not guarantee success for every company operating within the sector. As the EMS market becomes more competitive, manufacturers will need to demonstrate disciplined capital management, reliable execution, technological capability and the ability to build a diversified customer base.
The companies best positioned to benefit will be those that can move beyond capacity expansion and develop capabilities that customers are willing to pay for. These could include advanced PCB manufacturing, automotive and industrial electronics, semiconductor packaging, testing, design support and other forms of higher-value manufacturing.
The broader lesson is clear: a market correction does not automatically invalidate the electronics manufacturing opportunity. However, industry potential must ultimately be matched by sound execution, financial discipline and genuine value addition.
India’s Real EMS Test Is Still Ahead
India has already demonstrated that it can manufacture electronics at scale. The next challenge is considerably more ambitious: can India manufacture more of the electronics itself?
Can it reduce dependence on imported components? Can domestic manufacturers produce increasingly sophisticated PCBs? Can HDI and multilayer capabilities be scaled? Can automotive and industrial electronics become major pillars of EMS growth? Can OSAT help connect India’s semiconductor ambitions with its enormous electronics manufacturing base?
And can companies remain globally competitive as policy support gradually becomes less central to the business model?
The answers will determine whether India becomes simply a major electronics assembly destination or something much more significant: a genuinely integrated electronics manufacturing ecosystem.
That ecosystem will require more than factories. It will need engineering talent, specialized machinery, component suppliers, materials, testing capabilities, quality systems, technology partnerships and increasingly sophisticated supply chains.
It will also require Indian companies to keep moving upward in the value chain. That may ultimately be the most important story unfolding in the EMS industry today.
The first phase of India’s electronics manufacturing journey was about scale. The next phase is about depth. The companies that can move from assembly towards components, PCBs, automotive electronics, industrial systems and semiconductor-linked capabilities could help determine how far India’s electronics manufacturing ambitions ultimately go.
India has already learned how to manufacture electronics at scale. The next challenge is learning how to manufacture more of the electronics itself.
