EMS stocks surge after tariff pause, differential advantage

CHENNAI: Shares of electronics manufacturing services (EMS) companies surged on Tuesday’s trade as temporary exemption of electronics goods from the US tariffs and tariff differential with China are considered to be advantageous for domestic players. Stock prices of Dixon Technologies rose 4.39% to Rs 14,931.85 and Kaynes Technology rose 8.31% to 5,513.50. PG Electroplast shares increased 4.24%, Syrma SGS by 3.42% and Avalon Technologies and Centum Electronics increased by more than 2%.
Benchmark indices Sensex and Nifty jumped more than 2% after the tariff pause. Motilal Oswal Financial Services said in its daily market commentary that EMS stocks surged buoyed by the exemption of consumer electronics.
While the US President Trump on Sunday announced a temporary relief for tariffs on phones, computers and popular consumer electronics, the Indian markets remained closed on Monday for Ambedkar Jayanthi. However, the US president announced that tariffs would be moved to a different levy bucket. Industry representatives think this short-term reprieve and tariff differential compared to China is beneficial to Indian players and might ease short-term supply chain disruptions.
Ashok Chandak, president of India Electronics and Semiconductor Association (IESA) earlier said, continued uncertainties may prompt global players to diversify their manufacturing base and create an opportunity for India to emerge as a preferred alternative.
“Despite the dampening of near-term export euphoria, the long-term opportunity for India remains robust. With the US importing over $250 billion worth of smartphones and computer goods—30% of which currently come from China - India, with exports currently at $12 billion, still has significant headroom to grow. As such, for Indian businesses, this is a vital window to scale up operations, reorient strategies, and strengthen their position in global electronics value chains,” he said.
To realise this potential, India must build long-term, sustainable competitive advantages by advancing the Bilateral Trade Agreement (BTA), and fast-track executions of large-scale electronics manufacturing contracts, he added.