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Semiconductor and Electronics manufacturing services (EMS)

ICICIdirect Research 15 May 2026 DISCLAIMER

Government anchoring the development of India’s semiconductor and electronics manufacturing ecosystem
ISM 2.0: Developing semi-conductor value chain

Government continues to remain on reform path to develop semiconductor and electronics manufacturing ecosystem domestically. Media reports suggest the Centre is preparing India Semiconductor Mission (ISM) 2.0 with a pari passu funding model, where government incentives will be released in proportion to actual investments made by companies, improving capital discipline and execution efficiency.
Earlier, ~₹1.64 lakh crore of semiconductor proposals have already been attracted under the first phase, slightly above the Centre’s ₹1.6 lakh crore allocation. In listed space, Kaynes has already inaugurated its OSAT facility in Sanand wherein it is investing ~₹ 3300 cr, of which ~70% is expected to be subsidized by government. This investment is expected to generate ~₹ 4,000 cr of revenue by FY30E with 20%+ EBITDA margin.
The next phase i.e. ISM 2.0 will focus on reducing import dependency by strengthening domestic chip fabrication, packaging and broader ecosystem capabilities such as specialty materials, display technologies and design innovation, which remains positive for the EMS and semiconductor manufacturing ecosystem.

Faster approval for foreign partnerships, esp. on electronics side

Seperately, the Finance Ministry has officially notified amendments to FEMA rules, permitting foreign companies with up to 10% beneficial ownership from land-border sharing nations (primarily China) to invest via the automatic route. Further, larger proposals in selected manufacturing sectors that involves printed circuit boards (PCBs), electronics components and related manufacturing sub-sectors shall be placed on a fast-track FDI approval with timeline of about 60 days.
For EMS companies, the faster turnaround time for approval shall provide clarity and support overall business growth. EMS companies such as PG Electroplast, Epack, Amber, Kaynes, Syrma, etc may enter into tie up with such foreign companies as these norms eases, boosting electronics manufacturing in India.
 
Overall, the semiconductor and electronics manufacturing ecosystem is developing briskly, which provides these EMS companies an opportunity to deliver 25-30%+ kind of business growth trajectory consistently.

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