Beyond the Hype: Why India’s EMS Surge Isn’t a Dot-Com Redux 

Despite global trade uncertainty, India’s Electronic Manufacturing Services (EMS) sector, led by players like Dixon, Kaynes, Syrma SGS, and Amber, shows strong resilience driven by robust domestic demand, the strategic “China+1” supply chain shift, and substantial government PLI support (₹23,000 crore for components alone).

Unlike the speculative US EMS bubble that crashed with the dot-com era – fueled by irrational hype and vulnerable derived demand – India’s growth rests on tangible foundations: mature electronics consumption across diverse sectors, visible 1.5-2 year order books, and earnings projected at 30-35% CAGR. While tariff risks and over-optimism warrant caution, targeted incentives bridging early margin challenges and structural geopolitical advantages suggest this expansion is fundamentally more sustainable, positioning India for long-term manufacturing transformation, not a fleeting boom.

Beyond the Hype: Why India’s EMS Surge Isn’t a Dot-Com Redux 

While global trade tensions simmer and tariffs create uncertainty, India’s Electronic Manufacturing Services (EMS) sector – home to players like Dixon Technologies, Kaynes Technology, Syrma SGS, and Amber Enterprises – shines as a relative beacon of resilience. Their stocks, boasting impressive 40%+ CAGR over three years, inevitably draw comparisons to past market frenzies, particularly the US EMS bubble that spectacularly burst alongside the dot-com crash. But a closer look reveals fundamental differences suggesting India’s EMS story is built on sturdier foundations, even if caution remains prudent. 

The Current Engine: More Than Just Speculation 

India’s EMS growth isn’t fueled by blind optimism about a nascent internet. It’s driven by concrete, interconnected factors: 

• Domestic Demand Surge: Rising disposable incomes are accelerating electronics consumption across smartphones, appliances, and automotive sectors, creating a robust home market. 

• The “China+1” Imperative: Geopolitical shifts and supply chain diversification are making India a prime alternative manufacturing hub. FDI equity inflows into manufacturing jumped 18% to $19.04 billion in FY25, underscoring this trend. 

• Proactive Government Backing: Substantial Production Linked Incentive (PLI) schemes are the bedrock. The recent FY25-26 budget allocated ₹9,000 crore for electronics/tech PLIs, followed by a massive ₹23,000 crore Component Manufacturing PLI scheme (FY26-32). The evolving Indian Semiconductor Mission (ISM) further promises support for display fabs and PCB manufacturing, directly benefiting players like Dixon and Syrma. 

• Execution Focus: Unlike the dot-com era’s “build it and they will come” mentality, Indian EMS firms showcase tangible execution. Order books for major players are solidly filled for the next 1.5-2 years. Kaynes targets $1 billion revenue by FY28, while Syrma-SGS projects 20-22% sector growth despite tariff headwinds. Consensus estimates predict 30-35% earnings CAGR for FY25-30. 

The Ghost of Dot-Com Past: A Cautionary Tale, Not a Blueprint 

The US EMS boom of the late 90s serves as a stark warning. Between 1998-2000, stocks like Flextronics (now Flex), Jabil, and Sanmina skyrocketed by 150-250% CAGR, vastly outpacing the S&P 500’s 16%. Sector revenue jumped 47% in a single year (1999-2000). But this was pure bubble: 

• Speculative Fuel: The frenzy was driven by irrational exuberance around any internet-related company, regardless of fundamentals. 

• Sudden Pivot & Vulnerability: Traditional aerospace/defense EMS players hastily shifted to low-margin, high-volume consumer electronics without sustainable demand maturity. 

• Derived Demand Collapse: When the dot-com bubble burst, tech giants collapsed, leaving EMS providers with massive overcapacity. Sanmina’s stock plunged 87% by 2002; others lost over 81% of their peak value. 

Why India’s Trajectory Looks Different (and More Durable) 

While vigilance is essential, several factors distinguish India’s current EMS ascent: 

• Mature, Diverse Demand: Electronics are now essential infrastructure across industries – from consumer goods and automotive to industrial automation and healthcare. This isn’t a speculative bet on a new technology; it’s servicing the backbone of the modern economy. The demand profile is broader and more established than the nascent, concentrated internet market of 2000. 

• Geopolitical Tailwinds, Not Just Hype: The “China+1” shift is a structural, multi-year trend driven by genuine supply chain resilience concerns, not fleeting investor sentiment. India is a primary beneficiary. 

• Strategic Government Lifeline: PLI schemes aren’t handouts; they are calculated investments to overcome the inherent “high-volume, low-margin” challenge in EMS infancy. They provide critical breathing room for scaling up, aiming to achieve cost competitiveness before subsidies phase out. This phased support is absent in the purely market-driven, hype-fueled US bubble. 

• Long-Term Horizon: The growth projections ($300 billion sector by 2030) align with global trends like AI/ML proliferation and increasing electronics integration into everyday life, suggesting enduring relevance. 

The Verdict: Sustainable Growth, Not Irrational Exuberance 

The parallels with the dot-com era are valuable reminders to scrutinize valuations and execution risks. Tariff wars remain a wild card, and over-optimism can always creep in. 

However, the core drivers of India’s EMS boom – deep-rooted domestic demand, a genuine geopolitical manufacturing shift, and substantial, targeted government support – paint a picture of fundamentally sustainable growth. Unlike the US EMS bubble built on dot-com speculation and vulnerable to its collapse, India’s EMS leaders are building capacity based on visible order books and long-term structural shifts. They are positioned not just for a boom, but for a lasting transformation of India’s manufacturing landscape. The story appears to be one of strategic emergence, not speculative déjà vu.