India's listed electronics manufacturers are under pressure to defend profitability as the mobile-phone assembly boom slows, prompting a strategic shift towards higher-value industrial electronics. According to reports from Mint, Jasbir Singh Gujral, managing director of Syrma SGS Technology Ltd, India's second-largest listed EMS firm, stated that the company is increasingly looking to capture larger contracts from defence, aerospace and med-tech verticals. These segments represent opportunities for original design manufacturing and significantly higher margins compared to traditional consumer electronics.
The margin pressure driving this strategic shift is increasingly visible across the sector. As reported by Mint, Syrma SGS reported an operating margin of 7.1% in FY26, up 2.3 percentage points, while consumer electronics, representing 30% of revenue, recorded the slowest growth at 8% year-on-year. In contrast, automobiles, healthcare, industrial electronics and railways grew 39%, 36%, 30% and 74% respectively. The margin differential is substantial, with low-end mobile assembly typically generating operating margins of 2-3% compared to 15-20% for specialized defence and industrial electronics.
The same margin pressure is visible at larger peer Dixon Technologies, India's biggest listed EMS company. According to Mint, Saurabh Gupta, director and group chief financial officer of Dixon Technologies, confirmed the company is redirecting resources towards higher-margin electronics opportunities. The company reported an operating margin of 2.1% in FY26, with over 70% of revenue from mobile phone manufacturing facing significant demand slowdown. Dixon plans to increase exports from just under a quarter to about one-third of revenue in the near term.
The strategic pivot is visible across the sector, with companies expanding into smart metres for electricity boards, aerospace and defence subsystems, railway safety instrumentation, printed circuit boards and display assemblies, and medical devices. As reported by Mint, Kaynes Technology Ltd reported ₹3,626 crore in revenue with industrial electronics accounting for 55% of top line, though the company's operating margin of 10% was down 80 basis points over FY25. Despite missing investor expectations on revenue and cash flow guidance, the company maintains the highest operating margin among competitors due to focus on high-value industrial electronics.
According to Mint reports, analysts view this reallocation of focus as central to the sector's next phase of growth. Harshit Kapadia, vice-president at Elara Capital, noted that EMS firms will need to invest in high-value, low-volume areas such as defence, healthcare and specialized industries. The success of this transformation will depend on companies' ability to ramp up exports and increase component manufacturing, coupled with moving away from low-margin business areas towards high-margin industrial electronics. Industry estimates point to single-digit decline in India's annual mobile phone shipments this calendar year from 152 million smartphones shipped last year, highlighting the urgency of this strategic pivot.
