India’s once-celebrated electronics manufacturing sector — a cornerstone of the "Make in India" initiative — is witnessing a sharp pullback, as shrinking margins, lofty valuations, and slowing demand test investor patience. Stocks of key players like Dixon Technologies and Kaynes Technology have plunged over 15% year-to-date, significantly underperforming the broader market.
The correction marks a shift from years of euphoria, where India was seen as a potential manufacturing rival to China. Firms involved in making consumer electronics, mobile phones, and air conditioners had attracted immense investor interest due to robust topline growth, government subsidies, and geopolitical shifts. However, elevated valuations — some over 50x one-year forward earnings — now appear unsustainable, especially as demand growth begins to lag behind investment expansion.
Government incentive schemes such as PLI (Production Linked Incentive) have driven much of the sector's momentum, but with expiry dates nearing — especially for mobile manufacturers in FY26 — questions over long-term sustainability are surfacing. Additionally, upstream expansion efforts and rising capex commitments by firms like Kaynes and Amber Enterprises are adding to investor caution.
While India’s manufacturing ambitions remain intact, analysts warn that the sector’s next leg of growth must come from competitive edge and capital discipline
A once red-hot sector that embodied India’s “Make in India” vision is now facing a sobering reassessment. Electronics manufacturing firms — once seen as torchbearers of India’s industrial resurgence — are facing declining investor confidence amid shrinking margins, increased competition, and the winding down of lucrative government incentive schemes.
Dixon Technologies India Ltd. and Kaynes Technology India Ltd., key contract manufacturers for global brands like Samsung, have seen their share prices fall over 15% in 2025, diverging sharply from broader equity market gains. Valuations once soared on optimism that India could rival China as a global manufacturing hub. But with most firms trading at over 50x forward earnings, the sector's premium appears stretched compared to global peers like Hon Hai and Wistron, which trade closer to 11–12x.
Fund managers like Vikas Pershad of M&G Investments are now urging caution, suggesting that capital may be better allocated elsewhere given the compressed margins and uncertain demand outlook. Kaynes' ₹34 billion investment in semiconductor packaging and Amber’s ₹24 billion commitment to electronics expansion have triggered additional concerns about long-term cost burdens.
Other related industries, such as solar panel and battery makers, are also losing steam. Foxconn’s recent decision to repatriate hundreds of Chinese staff from iPhone plants in southern India has added to the uncertainty.
While India is still forecast to expand its manufacturing capacity, analysts like Vipraw Srivastava of PhillipCapital argue that long-term sectoral success now hinges on strategic capex and a lasting competitive edge rather than policy support alone.
