India’s EMS increasingly shifting to high-margin healthcare, MedTech sectors

India’s electronics manufacturing services (EMS) companies are increasingly shifting their focus from high-volume consumer electronics assembly to higher-margin sectors such as defence, aerospace, automotive, healthcare, industrial automation and telecom equipment, as they seek new growth engines and stronger profitability.

Industry leaders, including Dixon Technologies, Syrma SGS Technology, Amber Enterprises India, and Kaynes Technology India, are expanding into areas ranging from defence electronics and medical devices to industrial automation, power electronics, and electric vehicles.

Dixon Technologies has identified specialty EMS as a key pillar of its next growth phase. The company recently hired a specialist to lead efforts in high-margin businesses and is also looking to improve profitability from its display and camera module manufacturing operations.

“High-end specialty EMS business is a part of our next phase of transformational growth,” chairman and managing director Atul Lall told analysts during the company’s fourth-quarter earnings call.

Dixon has engaged a global consulting firm to develop a roadmap for building scale in aerospace, defence, automotive, medical and industrial electronics, including evaluating mergers and acquisitions opportunities. The initiative is aimed at identifying high-growth, high-value products, building technology capabilities, and expanding strategic partnerships to strengthen its position as a diversified manufacturing platform.

At Syrma SGS Technology, management expects automotive, industrial and healthcare electronics to drive growth in FY27, even as demand in consumer electronics remains subdued.

“All the key drivers of superior margin, i.e. automotive, industrial, healthcare, exports and ODM, they’re all fired in the right direction,” managing director Jasbir Singh Gujral told Moneycontrol after the earnings announcement.

Syrma is also betting on emerging opportunities in medical technology, defence electronics and printed circuit board (PCB) manufacturing, which is expected to become a meaningful contributor over the next two years.

While all four companies are pursuing higher-margin opportunities in sectors such as defence, aerospace, healthcare, industrial automation and automotive electronics, their core businesses remain intact. Dixon continues to derive most of its revenue from large-scale consumer electronics and smartphone manufacturing, Amber remains anchored in room air-conditioner manufacturing, Syrma SGS continues to benefit from its diversified consumer and industrial electronics portfolio, and Kaynes remains primarily an EMS provider across multiple industries.

Meanwhile, Amber Enterprises India is positioning electronics manufacturing as a major growth engine beyond its core air-conditioner business. The company is expanding across PCB manufacturing, industrial automation, power electronics and automotive electronics, while targeting specialised segments such as aerospace and defence, medical electronics and data-centre cooling.

“Our endeavour is going towards the value side of the businesses,” executive chairman and chief executive officer Jasbir Singh said during the earnings call. He noted that industrial electronics, power electronics, aerospace and defence, and medical electronics offer stronger customer stickiness, higher entry barriers, and superior margins compared with traditional volume-driven businesses.

For Kaynes Technology India, the strategy involves moving beyond contract manufacturing toward becoming a product and design-led company. Managing director Muthukumar Narayanaswamy said the company aims to increase the contribution of new product development and value-added offerings to around 30 percent of revenue over time.

To support this transition, Kaynes is investing in engineering, research and development, digital infrastructure and customer co-development capabilities. The company believes greater design ownership and original design manufacturing (ODM) opportunities will help improve margins while strengthening customer relationships.

Kaynes is also targeting high-growth sectors such as electric vehicles, aerospace and defence. In EVs, it is moving beyond supplying PCBs to offering higher-value electronic assemblies and products, while increasing localisation in aerospace and defence manufacturing. Alongside railways, these sectors are expected to diversify revenue streams and support long-term margin expansion through technology-intensive products.

Analysts say the industry’s next phase of growth will increasingly depend on its ability to move up the value chain. While EMS companies have so far benefited from volume-led manufacturing and government incentives, the focus is now shifting towards higher-margin segments such as defence, healthcare, industrial electronics and other specialised applications.

Brokerages note that leading players are exploring new growth verticals to diversify revenue streams, while greater export opportunities, increased localisation of components and a stronger presence in value-added electronics are expected to be key drivers of growth and profitability in the years ahead. Moneycontrol