India’s EMS industry set to surge with semiconductor push, but lofty valuations raise caution

India’s share of the worldwide EMS market remains modest at 5-6%, but KPMG projects the domestic industry to surpass $150 billion by FY2029-30, fueled by expanding exports, the China-plus-one strategy and robust policy support such as Make in India, PLI and the Electronic Component Manufacturing Scheme. The recently approved ISM 2.0 (Semicon 2.0) allocates Rs 1.27 trillion to boost semiconductor design and fabrication, which could tighten supply chains and enable EMS firms to climb the value chain.

Analysts note a shift toward more complex products—automotive, industrial and defence electronics—enhancing margins and customer stickiness. Investor enthusiasm is evident: nine EMS stocks have delivered a 55.3% equal-weighted return in 2026, with three exceeding 100% gains, but PE ratios are between 50 and 138, and five firms trade over 20% above five-year averages, raising valuation concerns. Experts such as Manish Bhandari advise selective positioning, while JP Morgan warns that high multiples should be justified by superior ROCE.

Risks include execution hurdles, customer concentration and policy changes. The article highlights three heavily recommended stocks: Syrma SGS Technology, Dixon Technologies and Amber Enterprises, each with distinct growth catalysts.