Trade pacts unlock global runway for India’s EMS sector

The trade agreements recently signed by India with the US, EU, EFTA countries (Switzerland, Norway, Iceland, and Liechtenstein), the UK, and the GCC are unlocking unprecedented opportunities for the country’s electronic contract manufacturing (EMS) sector.

Among competing nations, India now enjoys one of the lowest tariff regimes at around 18%. In comparison, tariffs stand higher in Indonesia (19%), Vietnam (20%), Malaysia (20%), Taiwan (32%), China (34% plus additional duties), and Sri Lanka (44%). This tariff advantage translates into lower landed costs for Indian-made PCBs, sub-assemblies, and consumer electronics, enhancing competitiveness against suppliers from China, Vietnam, and Mexico.

To fully capitalise on this opportunity, Indian companies must focus on cost efficiency, quality, innovation, compliance, and adoption of Industry 4.0 technologies. Strengthening marketing, prototyping, and backend operations will also be critical to scaling global presence. Huge opportunities exist in industrial electronics and automotive electronics, especially in the US ($60-70B automotive) and EU ($20-25B industrial) sectors, requiring tailored strategies for each region.

Coupled with global supply chain diversification trends, these developments present a once-in-a-generation opportunity for Indian firms to embed themselves in global electronics value chains.

India exported electronic goods worth $38.6 billion in 2025, with projections of $46–50 billion in 2026. While exports have grown at a CAGR of about 25% over the past decade, India still accounts for just ~1% of the global market. Mobile phones contribute nearly 60% of exports, with the US alone accounting for a similar share.

Indian companies must strategize to capture the available opportunity – a one-fit strategy to meet requirements of all markets will not work. To scale further, Indian firms must adopt differentiated strategies for key markets like the US and EU.

Strengthening manufacturing capabilities, quality standards, cybersecurity, and EDI interfaces is essential. Adoption of Industry 4.0, smart factories, and IoT-enabled quality systems will be crucial to meet stringent reliability benchmarks in developed markets. The EU deal includes a dedicated digital trade framework — protection for data transfers, IP, and design ownership. This is critical for joint R&D, design services and cloud-based manufacturing control systems used by EMS companies.

Both agreements also emphasise green technology cooperation and financing pipelines, allowing Indian EMS companies to access cost-effective funding for sustainable manufacturing initiatives.

Equally important is compliance with global quality standards. Companies must secure industry-specific and process certifications from credible agencies and prepare for EU regulations such as REACH, RoHS, and ESG disclosures. To enhance customer responsiveness, Indian firms may also need to establish integration or “box-build” facilities closer to client locations, enabling efficient post-sales support. The two biggest segments (outside mobile phones) that can be catered to by Indian companies are industrial electronics and automotive electronics. Each sector is discussed separately for the US and EU in the succeeding paragraphs.

PCBAs imported by the US are used in industrial & automation, electrical equipment and power management, industrial equipment and machinery, industrial electronics /sensors & instruments, power supplies, and telecom & networking – routers, base station modules

The OEM market, valued at $20–25 billion annually, presents a long-term opportunity. However, entry barriers are high, as OEMs prefer integrated solutions over build-to-print services. Indian firms must approach this segment with a three- to five-year horizon. These OEMs look for a solution and may not be interested in plain build-to-print services. Few among the Indian EMS players who are currently geared up should opt for this alternative.

The tier-1 supplier segment, estimated at $35–40 billion, offers a more immediate opportunity. Many global tier-1 suppliers already operate in India, making integration into their supply chains more feasible for domestic EMS players. As for EMS companies, some of the leading US companies that import automotive electronics include Jabil, Flex, Sanmina, Celestica, Benchmark, & Plexus. Since almost all of them have presence in the APAC region, Indian EMS players do not offer anything unique for these companies to migrate their supply chain.

Total EU demand for PCB assemblies is estimated at ~$120-130 billion, out of which approximately ~$60 billion is met from domestic production. Industrial electronics & power supplies typically represent 25-30% of EMS demand, which translates into a market size of $20-25. The European automotive PCB market is estimated at ~$2-2.5 billion annually, out of which 60-70% is met through imports. ADAS systems, electric vehicle power electronics, battery management systems, infotainment & telematics, and engine & body control modules constitute the bulk of imports.