Page 76 - Nuvama | IC Report 2023

• MANUFACTURING • NEW ENERGY • URBANISATION • CONSUMPTION PREMIUMISATION • EQUITY SAVINGS CULT

The export focus is already evident in a sharp uptick in India’s electronics exports in recent years—a
23% CAGR over the last five years (notably 40% YoY growth in FY22) to USD15bn. Breaking down
India’s electronics production further shows mobile phones lead the pack, contributing 40% to overall
electronics production in FY22. This is largely spurred by the PLI and China plus One sentiment. In fact,
a trend is already visible in the recent capacity announcements in India by Apple’s key manufacturers.

7,000 55
Exhibit 9:
Exports leading
from the front
6,100 41
INR bn
5,200 27
%
4,300 13
IMPORT
3,400 -1

2,500 -15
EXPORT FY17 FY18 FY19 FY20 FY21 FY22
Production Imports (% YoY, RHS) Exports (% YoY, RHS)
Source: MeIT, Nuvama Research

Globally, the electronics assembly market is quite concentrated—Foxconn is one of the few players. The
PLI scheme aims to have a similar structure domestically as well. Both domestic players (Dixon, Amber,
etc) and global giants (Foxconn, Pegatron, etc) are planning long-term supply-chain partnerships,
targeting both domestic and global markets.
In our view, much like global markets, the domestic EMS industry would be concentrated with top five–
seven players garnering a market share of more than 50% as brands go for outsourcing for value and
for sake of efficiency. In India too, a similar trend is visible with a few large companies garnering most of
the outsourcing market share. The PLI further aims to provide benefits to larger players as production
incentives warrant a large scale.

Exhibit 10: Global Domestic
Electronics PLI to
benefit the larger
players Samsung Lava
Foxconn Hon Hai Bhagwati (Micromax)
Rising Star Padget Electronics (Dixon)
Wistron UTL Neolyncs
Pegatron Optiemus Electronics

Source: PIB, Nuvama Research

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