Understanding Electronics Manufacturing Services (EMS)
EMS stands for Electronics Manufacturing Service refers to a range of services, including designing, manufracturing, testing, distributing electronic components and assemblies. These providers support OEMs (Original Equipment Manufacturers) by handling the entire manufacturing processs, in other words, EMS acts as the behind-the-scenes partner that helps reduce costs and shorten production timelines.
EMS factories operate across multiple countries and mainly located in China, Taiwan, Malaysia, Vietnam and Indonesia. China has played a strategic role in the global EMS landscape, maintaining its position as the world's largest electronic manufracturing nation since 2007. Additionally, Southeast Asia and India has emerged as potential alternatives for EMS companies in recent years, offering competitive advantages in labor costs, supply chain diversification and government incentives.
Key Drivers Behind India's EMS Sector Growth
India's EMS has experienced rapid growth over years, positioning itself as an attractive destination for electronics manufacturing. With the explosive growth in exports at 26 percent annually and the booming domestic market, India is expected to become an electronics manufacturing powerhouse over the next decades.
Geopolitical Factors
For decades, China has been the cornerstone of global electronics production. China's EMS valuation reached $350billion in 2024, solidifying its position as the world's largest electronics manufacturing hub. However, global supply chains have been shifting from China to other markets due to geopolitical tensions.
To adapt, Electronics Companies is implementing a strategy called 'China Plus One' - a supply chain approach that avoids investing solely in China and diversify business into other countries to mitigate risk. This strategy has gained more attention amid to the U.S - China trade war, which have led to tariff escalations.
In addition, COVID-19 pandemic had a significant impact on global economy, particularly the electronics industry. The pandemic caused severe supply chain disruptions and delays, exposing vulnerabilities in global manufacturing networks and it continues to influence global supply chain decisions, reinforcing the need for greater agility and localized production networks
Government Incentives and Policies
To accelerate growth in India's Electronics Manufracturing Services, the Government has implemented several key initiatives. One of them is PLI Scheme (The Production Linked Incentive Scheme) provides finacial rewards to manufracturers who achieved specified production and investment targets. This scheme was launched in 2020 with the ambition to position India as a global manufacturing hub, and it has driven participation from both domestic investors and global players.
The 'Make in India' initiative is the pivotal policy of India's Government to foster domestic manufacturing, encouraging companies to develop, manufracture and assemble products within the country. While other markets like Viet Nam, Malaysia, Thailand remain dependent on EMS export, India's EMS sector is evolving beyond low-cost solutions, striving to enhance and innovate processes. Local companies are gaining access to advanced technology and construction expertise
Skilled and cost - competitive labor force
In 2024, India overtook China as the world's most populous country with over 1.4 billion people and crucially, about 554 million people (39%) falling in the working-age group. This massive labor pool gives India an unmatched competitive edge to draw foreign companies setting up production facilities here.
India has a huge source of human capital consisting of skilled engineers, technicians and experienced factory workers. India's engineers possess advanced skills, focusing on many industry across key industry including automation, robotics and artificial intelligence.
India's workforce is young, tech-savvy and rapidly upskilling. While China faces an aging workforce and rising labor costs, India presents a compelling alternative with wages 30% - 40% lower. Furthermore, India's workforce is good at english making it easier for global firms to operate seamlessly in the country.
Improving Infrastructure & Supply chain
India has prioritized infrastructure development as a key driver for its electronics manufacturing sector. The government has committed 3.3% of GDP to infrastructure, with a strong emphasis on transportation and logistics. Roads and highways account for the largest investment share, followed by railways and urban public transport—strengthening the critical foundations for efficient supply chains.
This strategic focus directly benefits the EMS (Electronics Manufacturing Services) sector, enabling faster component movement and streamlined production. As a result, global EMS giants like Foxconn, Pegatron, and Flex are expanding their local manufacturing operations in India
India is evolving from being merely an outsourcing destination to emerging as a vital global electronics manufacturing center. The nation is determined to position itself not as just an alternative, but as the next indispensable electronics production hub. Backed by its skilled young labor force, cost advantages, and robust government initiatives, India is rapidly advancing toward becoming the world's second largest EMS provider.