Shares of electronics manufacturing services (EMS) companies such as Dixon Technologies, Kaynes Technology, Syrma SGS Technology, Cyient DLM, and PG Electroplast, among others, traded in the green on Thursday, July 16, with Dixon Technologies leading the gains.

The rally came after the Union Cabinet on Wednesday approved two major manufacturing initiatives with a combined outlay of nearly ₹1.9 lakh crore ($22 billion).

The measures aim to expand India's semiconductor ecosystem, scale up mobile phone production and strengthen the country's position as a global electronics manufacturing hub.

The semiconductor programme builds on the first phase of the India Semiconductor Mission, and will focus on six key areas: chip design, semiconductor equipment and materials, fabrication facilities, advanced packaging and testing, research and development, and talent development.

"The Union cabinet under the leadership of Prime Minister Narendra Modi has approved ₹1.27 lakh crore for Semicon 2.0," Minister for Electronics and Information Technology Ashwini Vaishnaw said at a news briefing.

The government expects the new scheme to attract investments of around ₹4 lakh crore and lead to semiconductor production worth ₹2 lakh crore during the scheme period.

India is also expected to export chips worth ₹1 lakh crore.

"Guidelines of the schemes will be published in about 20 days," the minister said.

Vaishnaw said the scheme will support the indigenous production of chips designed in India with domestic ownership.

In contrast to the previous plan, the new scheme will provide incentives in the form of a grant against equity or link them to royalty-based funding.

"The government will mimic proposals of private investors in the chip firms," a MeitY official said.

The government has cut incentives for setting up new chip plants from 50% to 40% for silicon fabs and 35% for other fabs.

MPMS details

"We expect to more than double the export of mobile phones to around ₹15 lakh crore under the new scheme from around ₹7.5 lakh crore under the previous scheme," the minister said.

What analysts said

Macquarie said the new Mobile PLI 2.0 scheme is a positive development, with Dixon Technologies and Amber Enterprises emerging as key beneficiaries.

Dixon Technologies is the clearest near-term beneficiary of the scheme, given its strong presence in mobile phone manufacturing and its role as a key beneficiary of the earlier PLI programme;

The framework also improves the business case for companies entering component manufacturing, including areas such as battery manufacturing;

Amber Enterprises could be a sleeper beneficiary, as the company stands to gain from opportunities arising in the broader electronics manufacturing ecosystem.

Jefferies highlighted that the Indian government has approved the new Mobile Manufacturing Scheme (MPMS), which aims to strengthen domestic mobile phone production.

Key takeaways from Jefferies.

Dixon Technologies was the key beneficiary of the first phase of the PLI scheme, but the company may face higher competition compared with 2021 levels.

While the initial outlay under the new scheme appears higher, the tenure of the programme at five years is slightly lower.

Under the Electronics Component Manufacturing Scheme (ECMS), approvals have been granted for:

Five camera module applications — Kaynes Technology, Syrma SGS Technology, ASUX, Uno Minda and Dixon Technologies.

Three display applications — Samsung, Dixon Technologies and Wangda.

Overall, analysts see the new manufacturing push as positive for India’s electronics manufacturing ecosystem, with Dixon remaining a key beneficiary while component-focused players such as Kaynes, Syrma and others could gain from increased localisation.

How shares are faring

When last seen, Dixon Technologies (India) shares were trading over 4% higher at ₹14,204 apiece on the NSE, while Cyient DLM shares were up over 3% at ₹556.35 apiece. Kaynes Technology India traded 2% higher at ₹3,402.90, while Syrma SGS Technology was up 1% at ₹1,417.70.

PG Electroplast shares traded at ₹606.50 apiece on the NSE, up over 1%.

Why is Cyient DLM rising sharply?

Cyient DLM has a diversified electronics manufacturing portfolio, catering to sectors such as aerospace, defence, medical technology, industrial, and transportation. Unlike pure-play mobile phone EMS companies, it is believed that the company’s gains from the latest government push are largely linked to the broader expansion of India’s electronics manufacturing and semiconductor ecosystem.

With inputs from PTI