New Trade Pacts Open Global Doors For India's Electronic Contract Manufacturers

(MENAFN- Live Mint) The trade agreements recently signed by India with the US, EU, EFTA countries (Switzerland, Norway, Iceland & Liechtenstein), UK, & GCC have opened up never-before-seen opportunities for the Indian electronic contract manufacturing sector.

Among competing countries, India has the lowest tariff rate at ~18%. Comparatively, Indonesia's tariff is ~19%, Vietnam (~20%), Malaysia (~20%), Taiwan (~32%), China (~ 34%+ additional duties) and Sri Lanka (~ 44%).

This means lower landed costs for Indian-made PCBs, subassemblies, and consumer electronics - improving competitiveness versus Chinese, Vietnamese, and Mexican suppliers.

This, coupled with the intent of global companies to diversify their supply chain, clearly offers a once-in-a-lifetime opportunity to Indian companies to become an integral part of the global electronic supply chain.

The journey is exciting, but capturing markets from competition will require the Indian companies to put their best foot forward in terms of cost, quality, consistency, innovation, compliance, sustainability, and an extraordinarily strong sourcing setup.

India exported electronic goods worth $38.6 billion in 2025, which is expected to grow to $46-50 billion in 2026. The growth in exports has been impressive - a CAGR of ~25% over the past 10 years, but India still services only ~1% of the available market. Mobile phones account for ~60% of the total. The US was the largest market with ~60%.

Indian companies must strategize to capture the available opportunity – a one-fit strategy to meet requirements of all markets will not work. We need to have separate strategies for the US and the EU - the two biggest markets.

What Indian companies need to do

First, they must beef up their marketing presence in the target geographies. In parallel, strengthen back-office operations especially the Quote Cell. This is the key to win customers, as global companies, unlike Indian customers, may not give a second chance to match target prices.

They need to streamline prototyping capabilities, as time to market is of critical importance. This would entail significant investments in tool room capabilities.

Strengthening the manufacturing, quality, cyber security, and EDI interface capabilities is critical. Companies should adopt Industry 4.0 standards, smart factories, and IOT-enabled quality control systems to meet the reliability requirements of customers in the EU and the US.

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 pacts include green technology cooperation and financing pipelines, enabling Indian EMS companies to access low-cost funds for investments in sustainable/renewable powered manufacturing processes.

Further, Indian companies must ensure that requisite quality certifications are in place. These should include industry-specific and process-specific certifications apart from the general quality certifications. Such certifications should be taken from reputable certifying agencies. The companies should especially prepare for EU REACH, RoHS, and ESG disclosure requirements.

Companies should build internal audit systems for traceability, ethical sourcing and labour standards as non-compliance could nullify duty benefits. They should be prepared to have warehouses in target geographies to cater to the customers' just-in-time needs.

Integration facility or box build infrastructure may have to be provided in or near the country of the customer. This would also facilitate providing timely post sale services to clients.

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.

For the US: Industrial electronics

The US imported industrial PCBA worth $30 billion in 2023 with Taiwan, accounting for ~40-42% and China, South Korea, Vietnam, Malaysia & Mexico accounting for another ~40-45%, with the balance coming in from the rest of the world. Industrial sensors, robotics controllers, motor drives, power supplies, electronics for renewable energy etc. constitute the bulk of PCB assemblies imported in the US.

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

For the US: Automotive electronics

ADAS and safety systems, infotainment and navigation, powertrain control units, EV battery management systems lighting, cluster boards, safety sensors etc. This market is valued at approximately$60-70 billion in 2024.

Automotive electronics are imported by OEMs, tier-1 suppliers and EMS companies.

The OEM market is estimated at ~$20-25 billion per annum. It will be tough and a long journey for Indian EMS companies to become vendors to these OEMs. Companies should plan this with a three-five-year time 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 market is estimated at $35-40 billion annually. This segment offers the biggest opportunity to Indian EMS companies. Some of them have presence in India and since few of the Indian EMS companies are already part of the domestic supply chain, it becomes comparatively easier to enter and integrate with their global supply chains.

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.

For the EU: Industrial electronics

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.

This includes boards used in Industrial automation Systems, Power supplies and converters, Renewable energy inverters, Motor drives, Industrial Control equipment, Telecom & DC Power Systems.

For the EU: Automotive electronics

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.

In a nutshell, the market opportunity is humungous, but it will have to be captured with a clear-cut strategy based on each company's competencies. Each account will have to be nurtured with care so that its full potential can be realized.

Companies should not blindly jump into it, but initiate action once they are assured about their ability to meet the customer requirements. One misstep at the start of the journey can delay the process by a couple of years.

The companies should prepare short term (1-2 years), medium term (2-5 years) and long term (5+ years) plans such that in five to six years, the Indian companies can offer the full stack of services - electronic design, manufacturing, full ownership of supply chain and responsibility of the life cycle of the product.

Jasbir Singh Gujral is Managing Director, Syrma SGS

Key Takeaways

India has the lowest tariff rate among competing countries, enhancing its competitiveness. Targeted marketing and robust operational strategies are crucial for Indian firms to penetrate new markets. Adopting Industry 4.0 standards will be essential for Indian manufacturers to meet global quality and reliability requirements.

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