KPMG Report: India's EMS Sector Reaches Inflection Point

India's Electronic Manufacturing Services sector has expanded rapidly over the past five years, but a new report from KPMG in India cautions that volume growth alone will not secure the country's long-term position in global electronics supply chains.

The report, titled India's Electronic Manufacturing Services Opportunity: From Assembly Hub to Integrated Manufacturing Powerhouse, notes that the sector has grown from roughly USD 10–12 billion in FY20 to USD 40–45 billion in FY25. Policy support, domestic demand growth and China-plus-one strategies among global original equipment manufacturers have all contributed to this expansion.

Despite the scale achieved, the report identifies a structural gap it characterises as a "scale without depth" paradox. India's manufacturing base remains concentrated in high-volume assembly — particularly in mobile and consumer electronics — while its participation in higher-value activities such as component manufacturing, product design and intellectual property development remains limited. Import dependency across critical components stands at 80–95 per cent, constraining domestic value addition and profit margins.

The global EMS market, estimated at USD 640–650 billion in 2025, is projected to surpass USD 1 trillion by the early 2030s. KPMG's analysis suggests India is well-positioned to capture a larger share, but notes that the window for action is finite as other manufacturing economies also compete for relocated supply chain capacity.

Segment priorities

The report recommends that India prioritise segments beyond consumer electronics to build durable competitive advantage. Automotive, industrial, and aerospace and defence manufacturing — areas characterised by higher engineering intensity and certification requirements — are identified as offering greater long-term value, even as consumer electronics continues to anchor overall volume.

Cumulative policy incentives of approximately USD 19.5 billion have been directed at strengthening the electronics manufacturing ecosystem, though the report warns that sustained competitiveness cannot rely solely on incentive programmes as they taper over time.

The report concludes that the next five to ten years will be decisive, and calls for coordinated action from government, EMS companies and global OEMs to invest in component ecosystems, engineering talent and design integration. Without these steps, India's share of global electronics manufacturing value — currently around 5–6 per cent — may plateau despite continued volume growth.