India's ESDM Industry Rises on OEM Outsourcing and PLI Boost

The Indian electronics system design and manufacturing (ESDM) sector is propelled by increasing outsourcing of production by original equipment manufacturers (OEMs) to dedicated ESDM firms, heightened demand for electronics, a large and growing local market, the 'China +1' approach, and several government measures like the production-linked incentive (PLI) scheme and investments in semiconductor growth, as stated in the report by PL Capital Group - Prabhudas Lilladher.

According to a report, the Indian electronics system design and manufacturing (ESDM) sector, valued at approximately Rs 2.09 lakh crore in FY23, is projected to grow to Rs 9.09 lakh crore by FY28E, reflecting a compound annual growth rate (CAGR) of 34 percent.

"ESDM sector's addressable market was valued at Rs 4.39 lakh crore in FY23, with OEMs gradually increasing reliance on ESDM partners," said Praveen Sahay, research analyst.

Additionally, the domestic printed circuit board assembly (PCBA) market is expected to clock a CAGR of 41.6 per cent and reach Rs 6.55 lakh crore by FY26E, up from Rs 2.31 lakh crore in FY23.

"Growth will be driven by factors such as increasing value addition, rising global demand for electronics, and the need for high-speed assembly and miniaturisation," said Sahay.

To take advantage of this opportunity, India is encouraging contract manufacturers and increasing its manufacturing capabilities, which will elevate PCBA exports, improve India's position in the global supply chain, and fortify its status as an electronics producer. The brokerage has started monitoring four local ESDM firms - Avalon Technologies, Cyient, Kaynes Technology, and Syrma SGS Technology, with an optimistic perspective.