The Future Scope of the EMS industry in India
India has recorded a commendable increase in domestic production but in spite of this spike, import of electronic products in India continues at the same pace. Which proves there are several challenges which Indian electronic manufacturing industry is facing despite low labour cost. These challenges include a manufacturer needs to ensure their unit produces finished goods in large volume and under competitive prices, lack of capital to carry out the manufacturing of ICs, irregular power supply, inefficient transport system, etc. So challenges are high but Indian EMS provider can aim to grab the opportunities of manufacturing for the local market and maintaining long term relationships with OEMs.
Import of electronics in India has become the second-largest contributor to India’s Current Account Deficit (CAD) and according to the report, India’s electronics import can grab the first position by 2021, if the situation continues in the same way. This scale clearly defines a huge gap between demand and domestic supply. This should be taken as alarm and we should know the reason why local manufacturing is not able to meet the demand of the domestic market?
As we have seen in the blog (Make In India: The Next Opportunity in Electronic Manufacturing), there have been favourable government policies to boost the domestic manufacturing and have played important role in increase of Electronic manufacturing particularly in setting new manufacturing firms for Telecom equipment’s, Home Entertainment, Consumer Electronics, Automotive Electronics, Medical Electronics, Defence electronics, etc.
Research and markets study says Indian EMS market is expected to grow at a CAGR of 38.1 per cent till 2023, from approx. Rs 560 billion in 2018 ( source: IBEF, Meity Reports, NTI Analysis).Increasing demand for Telecom equipment’s, Home Entertainment, Consumer Electronics, Automotive Electronics is expected to drive more growth in the EMS market. Not only these, but EMS is also working forward in lighting, power electronics, automotive, strategic electronics, aerospace, defence and railway sectors. As there is a high transition in electrical and electronics in the energy sector, power electronics is emerging as one of the most exciting areas in EMS. Aerospace and defence (A&D) OEMs are depending on EMS companies to address risk management, logistics and after-market service needs.
These Electronic Manufacturing sectors are growing steadily, as their demand is increasing, so OEMs are striving to cut costs so that they can compete their competitors in rapidly changing market conditions, technology advances and global competition.
Today there is a high demand for creativity and continuous innovation of electronic products. So, OEM engages the EMS provider for product design and development. The main reason for OEMs for developing a partnership with EMS providers is it helps them in controlling manufacturing costs. These EMS providers offer product design & development, Mould Designing & Development, Contract Manufacturing, EMS Manufacturing, PCB Design & Manufacturing etc. to OEMs in their brand name and ensure to provide unique products based on the needs. Hence, EMS providers have become a very important and cost-effective solution for OEMs.
Innovative Strategies on Demand:-
Due to the high growing competition in industries, EMS providers are adopting innovative strategies to gain a better understanding of their customers’ needs & business models. EMS providers are ensuring to use effective communication tools, creating global footprints, focusing on core competencies and offering value-added services. EMS providers are trying to enhance their value proposition by offering integrated and end-to-end solutions.
EMS enhancement in a Glance:-
OEMs continuously introduce new and innovative products in the electronics market to meet the ever-increasing end-users demands. So, increasingly OEMs are dependent on EMS provider for benefits like cost savings, getting high quality & quantity in less time and for providing flexibility. OEMs outsource their production to EMS providers as their products are manufactured by utilizing advanced technology, assembly lines, quality control, quality assurance, stability testing, packaging and human skills to create a finished product. EMS companies operate as partners with OEMs by providing services like contract design services, prototyping, final system assembly, configuration, order fulfilment and after-market services like repair. This, not only benefits EMS companies but allows OEMs to concentrate on their core competencies such as research and product development, brand building as well as sales and marketing. This, in turn, helps both parties to achieve high profitability and a good market share.
So, government policies, OEMs and EMS providers have to go hand in hand for future enhancement in the EMS industry.
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