An analysis by Frost & Sullivan – Analysis of the Indian Electronics Manufacturing Services Market, finds that the market earned revenues of more than $3.79 billion in 2012 and estimates this to reach $10.67 billion in 2016. As per the research analysis the market is expected to grow at a strong compound annual growth rate of 29 percent during this period.
The demand for electronics products in India, has escalated over the years considering higher incomes, wider choices, and lower product prices. These developments have also heightened the need to improve the country’s electronics manufacturing ecosystem, leading original equipment manufacturers (OEMs) to turn to electronics manufacturing services (EMS). The expanding supply-demand gap for electronic products enhances the opportunities for EMS companies in the untapped Indian market.
“As the American and European markets become saturated, global OEMs are looking to invest in Indian businesses and set up manufacturing plants in the country, offering huge potential for EMS providers,” said the Frost & Sullivan Measurement and Instrumentation Analyst . “Proposed Government initiatives to improve the domestic manufacturing sector will also boost market expansion.”
EMS companies have high revenue generation possibilities in the telecom, consumer goods and industrial segments. Increasing budgetary allocation in the defense, space and IT sectors will present added growth avenues for Indian EMS enterprises.
These opportunities, however, typically only include orders for product hardware manufacturing, as OEMs prefer to handle software development and designing, thereby limiting revenue inflow.
The lack of fabrication plants and raw materials has forced EMS companies to import a majority of the materials and components from global suppliers, further shrinking profit margins. While on one hand, limited exposure to reverse engineering has restricted the design capabilities of EMS companies, on the other hand, the heavy reliance on foreign OEMs has slowed the pace for market development.
“EMS providers need to supply end-to-end solutions and value-added services to ensure revenue growth,” noted the analyst. “Growth-focused policies and government investments to upgrade existing infrastructure will drive the domestic manufacturing market and bridge the supply-demand gap.”
The analysis report suggests that a stable business model focused on servicing Indian OEMs and decreasing dependence on global orders, along with the advantages of cost-effectiveness and a talented, affordable workforce, will make India the EMS hub in the Asian subcontinent.
Source: Frost & Sullivan