Kaynes Technology India Ltd. and Syrma SGS Technology Ltd. are Jefferies' preferred picks in India's electronics manufacturing services space as the brokerage expects the next phase of the government's production-linked incentive, or PLI, programme to benefit component manufacturers more than assembly-led players. It retained a Hold rating on Dixon Technologies (India) Ltd.
The brokerage said its review of the PLI programme showed the government's focus has shifted towards backward integration through the Electronics Components Manufacturing Scheme, or ECMS. It expects the scheme to support domestic production of high-value components, creating stronger growth opportunities for companies with a larger presence in electronics components.
Jefferies said it prefers component manufacturers such as Kaynes Technology and Syrma SGS over original equipment manufacturers, while maintaining a Hold recommendation on Dixon Technologies.
Mobile PLI Sets The Stage For Component Manufacturing
According to Jefferies, the mobile phone PLI scheme achieved its primary objective of expanding domestic manufacturing and exports before ending in March 2026. The brokerage estimated that incentives disbursed under the scheme would total about Rs 199 billion, or around 52% of the initial outlay proposed in September 2021.
The report said more than 99% of mobile phones sold in India are now produced locally, compared with less than 30% in FY15. It added that about 56% of smartphones manufactured under the PLI programme were exported, helping India become the world's second-largest mobile phone manufacturing hub. Smartphones have also become India's largest export category by HS code, compared with a ranking of 167 in FY15.
However, Jefferies said domestic value addition remains limited at an estimated 17%, below the government's earlier target of around 25%.
"We view this PLI as a success in localising mobile assembly and boosting exports," Jefferies said in its report. "But value-add is low at an estimated 17% versus the government's initial target of around 25%," Jefferies said in a note.
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ECMS Signals Next Growth Phase For EMS Companies
Jefferies said the government increased the ECMS incentive outlay by 75% to Rs 400 billion in February 2026 after receiving a stronger-than-expected industry response.
The brokerage estimates that ECMS could support nearly half of a mobile phone's bill of materials, compared with the assembly-focused mobile PLI scheme. It identified printed circuit board manufacturing, particularly high-density interconnect and multi-layer PCBs, as a key opportunity, citing an addressable market of about $5 billion where 85% to 90% of domestic demand is still met through imports.
The report added that the ECMS programme has received about 249 applications, with approved participants including Indian units of Samsung, Foxconn, TDK and AT&S, alongside domestic companies such as Dixon Technologies, Kaynes Technology, Syrma SGS, Uno Minda, Motherson, Wipro and Tata Electronics.
"We prefer component plays (Syrma, Kaynes) versus assembly OEMs (Dixon as Hold)," Jefferies said.
Jefferies estimates listed EMS companies could deliver average earnings per share growth of about 26% a year between FY26 and FY29, while noting that execution remains the key monit
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