EMS stocks jump as duty waived, US tariffs cut to 18%

Policy triggers drive a fresh EMS rally

Indian Electronics Manufacturing Services (EMS) stocks saw sharp moves across multiple sessions after a series of policy and trade developments improved cost visibility for the sector. The latest push came after the government waived basic customs duty (BCD) on select inputs used to manufacture display assemblies, lithium-ion cells, and inductor coil modules. Separately, sentiment also strengthened after the United States lowered tariffs on Indian-origin goods to 18% from 25% and moved to remove an additional 25% punitive duty that had been linked to India’s crude oil purchases from Russia.

Together, these changes improved the sector’s near-term outlook on input costs, export competitiveness, and supply chain planning. Stocks including Kaynes Technology, Dixon Technologies, Syrma SGS Technology, Avalon Technologies, PG Electroplast, and Amber Enterprises featured among the day’s strongest gainers as traders repriced the sector quickly.

What the customs duty waiver covers and why it matters

The government waived the basic customs duty on goods used in the manufacture of display assemblies, lithium-ion cells, and inductor coil modules until March 31, 2029. The stated intent is to support domestic manufacturing of electronic products such as smartphones, laptops, wearables, and smart TVs. The relief is meaningful for the EMS value chain because these inputs sit upstream of final assembly and can influence overall bill-of-materials costs.

The Finance Ministry issued three separate notifications that reduced the BCD on key electronics manufacturing components to zero with immediate effect. By setting the exemption window through March 31, 2029, the notifications also extend planning visibility for manufacturers and suppliers that invest in tooling, sourcing contracts, and capacity ramp-ups tied to these components.

Immediate market reaction: Kaynes, Dixon, Syrma, Amber, PG Electroplast

The announcement around BCD relief was followed by sharp moves in listed EMS counters. Kaynes Technology surged 7.5% to ₹1,446 in Thursday’s session as buyers rotated into stocks expected to benefit from lower input costs. PG Electroplast, Dixon Technologies, Syrma SGS Technology, and Amber Enterprises also rallied by up to 6% in the same trading window.

These reactions reflected how closely EMS valuations track policy changes that affect costs and the direction of domestic manufacturing incentives. With the exemptions applicable immediately and valid for several years, the market treated the move as more than a one-quarter headline and bought into the theme across multiple names.

India-US trade deal: tariff reset lifts export optimism

A separate catalyst came from the India-US trade deal, which triggered sharp moves across EMS counters during the session. The US lowered tariffs on Indian imports to 18% from 25%. Alongside this, an additional 25% punitive duty that had been linked to India’s crude oil purchases from Russia is also being removed.

Market participants read the tariff reset as a direct boost to export competitiveness and supply chain visibility for Indian contract manufacturers serving global original equipment manufacturers (OEMs). After a strong Budget-day rally, EMS stocks saw fresh buying as traders factored in tariff relief and a smoother export path to the US.

How lower US tariffs can affect contracts and margins

The United States’ decision to move to a flat 18% tariff level was also framed as being below the historic 30-plus percent range for many electronics components. For contract manufacturers such as Dixon Technologies, Kaynes Technology and Syrma SGS, this can translate into a cost-of-goods-sold (COGS) advantage when bidding for US-based OEM contracts. Lower duties can reduce the landed cost of items like printed circuit boards, chassis and assembly services, improving quote competitiveness.

ICICI Securities flagged the move as a catalyst for margin improvement, describing the tariff differential as a “price-elasticity lever.” The brokerage note highlighted that when duty costs drop, exporters can either pass savings to customers to win volumes or retain some of the benefit to support profitability. Both outcomes can improve earnings visibility, helping explain the immediate rally in EMS stocks after the trade announcement.

Key stock moves tracked during the session

The day’s price action showed a broad-based shift in sentiment once tariff concerns eased. Avalon Technologies hit a 20% upper circuit at ₹1,022, its highest level in over two months. Syrma SGS Technology jumped 10.6% to ₹802.55, also a two-month high. Dixon Technologies gained nearly 7%, while Kaynes Technology advanced about 8.3%.

Amber Enterprises rose 9.3% at the day’s high, and PG Electroplast climbed 8.4%. The breadth of gains across different EMS business models suggested traders were positioning for both domestic manufacturing tailwinds and better export economics.

Budget 2026 adds a third tailwind: ₹40,000 crore outlay

Earlier, during a special trading session on Sunday, February 1, 2026, shares of leading EMS companies rallied by up to 7% after a major policy announcement in the Union Budget 2026. Finance Minister Nirmala Sitharaman announced an increased outlay of ₹40,000 crore for the Electronics Component Manufacturing Scheme to boost domestic production.

Following the announcement, Syrma SGS Technology and Amber Enterprises were among the top gainers, each up 6.7% to ₹812.10 and ₹6,095.10 respectively. Dixon Technologies gained 5.4% to ₹11,008.85, and Kaynes Technology rose 5.2% to ₹3,656.15. PG Electroplast advanced 3.5% to ₹566.55, while Avalon Technologies rose 3.6% to ₹888.30.

Snapshot table: key policy actions and validity

Market impact: why the moves were so sharp

The combined effect of lower input duties and improved export terms can alter earnings visibility for EMS firms, which operate on large volumes and tight operational metrics. The duty waiver until March 31, 2029 gives manufacturers a longer runway to plan sourcing, qualify vendors, and commit capex against a clearer input-cost framework.

On the export side, the cut in US tariffs to 18% from 25%, along with the removal of an additional 25% punitive duty, helped traders reassess the sector’s exposure to tariff-related uncertainty. In practice, the market reaction played out as rapid repricing across the most liquid EMS names, with several stocks recording high single-digit gains and Avalon Technologies hitting an upper circuit during one session.

What investors will watch next

For investors tracking the EMS theme, the focus is likely to remain on the durability of these policy benefits and how quickly they translate into order flows and operating metrics. The BCD exemptions are already specified to run through March 31, 2029, offering a defined policy window. On the trade side, attention will stay on how the tariff reset shapes export bidding and supply chain commitments, particularly for contract manufacturers highlighted in brokerage commentary.

There are also expectations of customs duty rationalisation and tariff reforms in the Budget that may reduce input costs for electronics production. With multiple catalysts arriving close together, the sector’s next moves are likely to be driven by subsequent official clarifications, contract wins, and any follow-through on scheme implementation timelines.

Key numbers table: stock moves cited across sessions

Conclusion

EMS stocks moved sharply as investors reacted to a cluster of supportive signals: zero basic customs duty on select electronics manufacturing inputs until March 31, 2029, a US tariff cut to 18% from 25%, and a ₹40,000 crore Budget 2026 outlay for the electronics components ecosystem. The immediate price action across Kaynes Technology, Dixon Technologies, Syrma SGS Technology, Avalon Technologies, Amber Enterprises, and PG Electroplast underlined how quickly sentiment can change when policy reduces cost uncertainty. The next cues for the sector are expected to come from follow-through on scheme implementation, further duty rationalisation discussions, and any evidence of improved export order momentum under the revised US tariff framework.