Budget boosts long-term outlook for Dixon, Kaynes Tech, other EMS stocks, say brokerages

Budget impact on EMS stocks

• Budget 2026 boosts ECMS funds to Rs 40,000 crore for electronics manufacturing
• Dixon Technologies and Syrma SGS shares rose after Budget announcements
• Brokerages see medium-term boost for EMS sector but flag near-term risks

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Finance Minister Nirmala Sitharaman presented Union Budget 2026 on February 1. Brokerages see India’s electronics manufacturing services sector benefitting from the Budget’s pivot toward higher value addition and backward integration.

Dixon Technologies shares rose around 2 percent to close at Rs 10,354 apiece on February 2. Syrma SGS Technology shares meanwhile gained more than 1 percent. Kaynes Tech shares however closed in the red today.

Budget reforms for EMS sector:

While presenting Union Budget 2026, Finance Minister Nirmala Sitharaman announced a sharp increase in the allocation for the Electronics Component Manufacturing Scheme (ECMS) to Rs 40,000 crore. The ECMS, notified by the Ministry of Electronics and Information Technology on April 8, 2025, was originally launched with an outlay of Rs 22,919 crore over six years.

The scheme aims to develop a robust domestic electronics component base by offering targeted incentives across 11 key segments, including printed circuit boards, capacitors, resistors, display modules and other critical components.

The enhanced outlay is expected to boost domestic value addition, curb import dependence on critical components, and strengthen the integration of Indian manufacturers into global supply chains.

Brokerages on EMS:

CLSA said that the budget marks a "pivot point" for electronics manufacturing. It added that the government allocation supports domestic component manufacturing and integration. However, it flagged near-term risks from lower smartphone assembly incentives.

Jefferies meanwhile said that higher allocation supports the medium-term outlook for electronic companies, but flagged execution timelines and the expiry of assembly-linked incentives as near-term risks for some players.

Nomura flagged continued policy support for electronics and semiconductors in the Budget as a key positive within a fiscally restrained framework.

"A boost to the semi-conductor sector and electronics manufacturing along with strategies to establish dedicated Rare Earth Corridors, clearly establishes the intention towards not only making the Indian economy self-reliant, but also ring fence the economy from global unrests that tend to disturb the supply chain ecosystem," said Prashant Kumar, Managing Director & CEO of Yes Bank.

"Budget 2026 marks a structural shift in India’s semiconductor strategy by recognising that scale without sustainability is not globally competitive. With India Semiconductor Mission 2.0 and a proposed Rs 40,000 crore outlay for electronics manufacturing, the focus now moves beyond capacity creation to process excellence," said Deepak Pahwa - Chairman, Pahwa Group.

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