India’s electronics manufacturing story, production crossed US $130 billion in FY25. Electronics exports grew at a compound annual rate of 31 per cent between FY21 and FY25. Mobile phones, once almost entirely imported, are now assembled domestically at near-total scale. The PLI scheme attracted global manufacturers and domestic conglomerates alike, and India’s share of global electronics exports nearly doubled from 0.6 per cent in 2021 to 1.1 per cent in 2024 — the fastest growth rate among all major EMS markets.
But a new KPMG report released in May 2026 draws a sharp distinction between scale and depth — and it is the depth question that enterprise technology buyers should be watching closely.
The rewiring that created India’s opening
For three decades, manufacturing logic was simple: concentrate production where it is cheapest and optimise relentlessly for unit cost. China built that case more convincingly than any other country, accounting for roughly 25 to 30 percent of global electronics manufacturing output by the early 2020s, embedded within a deeply integrated industrial ecosystem.
That logic has since fractured. Geopolitical friction, tightening controls on advanced technology flows, and the treatment of semiconductors as strategic national assets have pushed global OEMs to reassess single-geography dependence. COVID-19 and the semiconductor shortage of 2021–22, which cascaded across automotive, consumer electronics, and industrial sectors made resilience a boardroom priority rather than a supply chain footnote. Regulatory pressure followed, with the US CHIPS Act, the EU Chips Act, and India’s own PLI schemes creating fiscal architecture for geographic diversification.
India benefited directly from this shift. The APAC region still commands 68 percent of the global EMS market, but within that, the China+1 strategy concentrated relocation volumes into a handful of countries. India, alongside Vietnam, Malaysia, Thailand, and Mexico, captured meaningful early-mover advantage, particularly in labour-intensive consumer electronics.
Why the scale is real but narrow
India’s domestic EMS market expanded from USD 10–12 billion in FY20 to USD 40–45 billion in FY25. The global EMS market itself stands at approximately USD 640–650 billion in 2025, with projections pointing to over USD 1 trillion by the early 2030s. India’s share of that global pool remains at 5 to 6 per cent; meaningful, but far below its stated ambitions.
Mobile phones account for 44 per cent of India’s electronics production. Consumer electronics and industrial electronics together contribute another significant portion, but the higher-complexity segments — automotive electronics, telecom infrastructure, aerospace and defence — remain nascent. India has scaled assembly, but it has not yet scaled capability.
This is what the report describes as the “scale without depth” paradox. India’s EMS players are predominantly operating in the lower half of the manufacturing value chain — basic PCB assembly and box-build operations. These carry EBITDA margins of 2 to 7 percent. Design-integrated manufacturing, where EMS providers co-develop products with OEMs, commands margins of 10 to 20 per cent or more. It reflects the organisational capability gap that KPMG identifies as the core challenge: moving up the value curve is not primarily a capital investment decision, it is an engineering depth decision.
The certification gap nobody talks about
Quality certifications in EMS are market access gates measured in years. IATF 16949 for automotive, AS9100D for aerospace, ISO 13485 for medical devices achieving any of these requires three to seven years of sustained facility investment before the first qualifying order. India currently accounts for under 8 per cent of globally certified automotive EMS sites, against China’s 55 per cent-plus share.
The risk beneath the growth
Policy has driven India’s EMS rise, but KPMG flags an incentive-led plateau risk. Several PLI beneficiaries missed production targets, underscoring that fiscal incentives cannot substitute for ecosystem depth. If India’s cost competitiveness remains dependent on PLI disbursements rather than inherent productivity, the sector faces a viability question as incentive cycles taper.
The report’s concludes that the distance between India as an assembly hub and India as a global electronics powerhouse is not capital — it is strategy, coordination, and the patience to build capabilities whose payoffs arrive over a decade, not a policy cycle.