The ongoing US-China trade war has given a strong boost to India's electronics manufacturing services (EMS) sector, with major firms like Dixon Technologies, Kaynes Technology, Amber Enterprises, and PG Electroplast witnessing a surge in their stock prices. The developments come after fresh reciprocal tariff hikes by both the United States and China, escalating trade tensions between the world’s two largest economies.

Rally in EMS Stocks on Trade War Escalation

On Friday, shares of major EMS companies rallied significantly on expectations of higher orders and improved margins. Dixon Technologies emerged as the top gainer in the Nifty Consumer Durables index, jumping 7.66% during the session. The stock opened with a 5% gain and has now gained 14% in the last three trading sessions, signalling strong investor sentiment.

Similarly, PG Electroplast saw a notable spike of 8.41%, hitting an intraday high of ₹923 per share, after opening at a gain of 3.83%. Amber Enterprises, Kaynes Technology, and Syrma SGS Technology also followed the upward trend, gaining between 6% and 8% in the same session.

This rally comes as investors anticipate a shift in global supply chains, with India potentially benefiting from rising demand for non-China-based electronics manufacturing hubs.

US-China Trade War Heats Up

The positive market sentiment stems from the renewed escalation in the US-China tariff war. On April 11, China announced additional tariffs on US goods, raising them from 84% to 125%, effective April 12, 2025. This move was in response to US President Donald Trump's decision a day earlier to impose a 145% tariff on Chinese goods. These aggressive moves mark a sharp escalation in the trade war, despite a 90-day pause on reciprocal tariffs on most other countries announced by the US.

The prolonged tensions are expected to benefit alternative manufacturing destinations like India, which is already working aggressively to strengthen its electronics manufacturing capabilities under schemes like PLI (Production Linked Incentives).

Indian EMS Sector in Spotlight

As global OEMs (Original Equipment Manufacturers) and electronics brands look to diversify their manufacturing base, India’s EMS sector is gaining prominence. Firms like Dixon Technologies and Kaynes Technology are well-positioned to grab a greater share of contract manufacturing for consumer electronics, telecom equipment, and smart devices.

India’s large workforce, improving infrastructure, and policy-driven incentives make it an attractive destination. The current geopolitical landscape is accelerating this transition, giving Indian manufacturers a competitive edge.

US Pauses Tariffs on India for 90 Days

In a significant development, the United States has paused the implementation of additional tariffs of up to 26% on Indian goods for a period of 90 days, effective until July 9, 2025. The decision, delivered through a White House executive order, came shortly after the US imposed universal tariffs on nearly 60 countries.

This temporary relief provides crucial breathing space for Indian exporters, who have been under pressure from volatile global trade dynamics. The move also gives policymakers an opportunity to push for a broader India-US trade agreement, aligning with recent diplomatic efforts to boost bilateral economic ties.

Investor Sentiment Turns Positive

Market experts suggest that the Indian EMS sector may continue to benefit in the short to medium term as the trade war continues to play out. With India seen as a neutral and stable manufacturing partner, the order books for local EMS companies are likely to improve, especially for export-bound products.

Foreign institutional investors (FIIs) have also shown interest in India's EMS players, encouraged by strong growth potential, expansion plans, and favorable global tailwinds.

This optimism is reflected in the stock price movements and trading volumes of these companies, which have outperformed broader indices in recent sessions.

PLI Scheme: A Game Changer

The Indian government’s PLI scheme for electronics manufacturing has already led to substantial capacity expansion in EMS companies. Firms are investing in new plants, automation, and R&D, to meet the increasing demand. The scheme provides financial incentives for incremental sales, making Indian products more cost-effective on the global stage.

Dixon Technologies, for instance, is rapidly expanding its capacity to manufacture smartphones, LED TVs, and other consumer electronics. Kaynes Technology is eyeing new segments including automotive electronics and industrial automation, while Amber Enterprises is broadening its presence in air conditioners and components.

With the global focus shifting toward China+1 strategies, India's early groundwork is paying off.

Conclusion: Long-Term Benefits for India’s EMS Ecosystem

The US-China trade war, while disruptive for global supply chains, may turn out to be a long-term positive for India. The recent stock surge in Indian EMS companies indicates strong market confidence in their growth trajectory.

As the tariff war intensifies, and countries seek alternatives to Chinese manufacturing, India stands at a strategic crossroads. With continued policy support, infrastructure upgrades, and global collaboration, the EMS sector could be one of India’s strongest pillars of industrial growth.

Investors, policymakers, and global brands alike will be closely watching India’s role in reshaping global electronics manufacturing. For now, the momentum is clearly in favour of Indian EMS players, who are expected to capitalize on global realignments and rising export opportunities.

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