KPMG report terms India's EMS market growth a "scale without depth"

New Delhi: The electronic manufacturing services (EMS) market is expected to exceed USD 150 billion by FY'30, driven by domestic demand, policy support and China+1 strategies, from USD 40-45 billion in 2025, a report said on Monday. However, this growth reflects a "scale without depth" paradox, for while India leads in high-volume assembly, particularly in mobile and consumer electronics, its presence in higher-value areas such as design, components and IP ownership remains limited, KPMG India said in its report.

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The report analyses the global EMS landscape and India's evolving role across market growth, segment prioritisation, value chain dynamics and structural constraints, assessing the shift from a high-volume assembly base to an integrated manufacturing ecosystem.

The global EMS market is estimated at USD 640-650 billion in 2025 and is projected to exceed USD 1 trillion by early 2030s, driven by connectivity, electrification and OEM outsourcing, according to the report.

It also said globally, electronics manufacturing is moving from cost optimisation to resilience-led, multi-node supply chains, with EMS players evolving into strategic partners for OEMs.

For India, this is a significant but time-bound opportunity, it said, adding that value creation increases significantly with deeper integration, from assembly to design-led and system-level capabilities, making capability building across engineering, supply chains and product development a strategic priority.

Structural constraints persist, with 80-95 percent import dependency across critical components limiting domestic value addition and margins, the port said and added that addressing these gaps will be critical as policy incentives taper.

The report also highlights the need for segment prioritisation: while consumer electronics anchors scale, long-term value will come from higher-complexity segments such as automotive, industrial, and aerospace and defence, where certification depth and engineering intensity drive durable advantage.

"India's EMS sector has reached a pivotal moment where the foundations of scale are firmly in place, but the next phase of growth will be defined by depth. As global supply chains reconfigure towards resilience and multi-node manufacturing, India has a time-bound opportunity to move beyond assembly-led growth and build integrated, design-driven capabilities," said Rohan Rao, Partner, Automotive & Lead, Electric Mobility, at KPMG in India, said.

Realising this potential will require sustained investment in component ecosystems, engineering depth, and supply chain sophistication to unlock higher value participation in global electronics manufacturing, Rao added.

According to the report, India currently accounts for 5-6 percent of global EMS manufacturing, indicating significant headroom for growth.

Policy interventions have been a critical growth enabler, with USD 19.5 billion in cumulative incentives aimed at strengthening the electronics manufacturing ecosystem, it said.

Moreover, as per the report, sustained competitiveness will depend on transitioning from capacity-led growth to capability-led growth, including localisation, certification depth, and design integration.

"The trajectory of India's EMS industry will be determined not just by how much capacity it builds, but by where it chooses to compete," said Raghavan Viswanathan, Partner, M&A Consulting at KPMG in India.

While consumer electronics will continue to anchor scale, long-term value lies in higher complexity segments such as automotive, industrial, and aerospace, where certification depth, precision, and engineering capabilities create durable advantage, Vishwanathan stated.

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The transition from capacity-led to capability-led growth will be critical for India to emerge as a globally competitive electronics manufacturing hub, he said.

India's EMS sector can evolve along multiple trajectories -- from an assembly-led growth model to an integrated manufacturing node, or further into a globally competitive electronics ecosystem with deep component capabilities and design-led innovation, as per the report.

Noting that the next 5-10 years will be decisive, the report stated that realising this potential will require coordinated action across government, EMS players and global OEMs -- focused on building component ecosystems, strengthening workforce capabilities, investing in engineering and design, and deepening integration across the value chain.

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