The Electronic Component PLI Scheme Will Help India Achieve Export Target: Dixon Technologies

Summary

Dixon Technologies is poised to benefit from the government's electronics PLI scheme, focusing on components like displays, camera modules, and mechanical parts to enhance India's electronics supply chain. With a forecasted ₹3,000 crores in revenues from its component business by FY27, Dixon is confident about long-term growth, even post-PLI. They are also expanding into the lighting sector through a joint venture with Signify India, targeting ₹2,000 crores in lighting revenue by FY28. Backward integration, cost optimization, and strategic partnerships will be key to their continued success.

Takeaways

• 😀 Dixon Technologies is focused on manufacturing electronic components, including displays, camera modules, and other mechanical parts.
• 😀 The government’s electronics PLI (Production Linked Incentive) proposal is moving forward, with a 25,000 crore allocation, focusing on components like displays and camera modules.
• 😀 Dixon has already partnered with HKC for display modules, planning to manufacture mobile and IT hardware displays starting in late 2025.
• 😀 The PLI scheme aims to strengthen India's electronics supply chain by reducing imports and boosting local manufacturing capacities.
• 😀 The PLI scheme is expected to help Dixon achieve double-digit margins from their backward integration into display and camera modules, increasing their value-added components in mobile phones.
• 😀 The overall target for India’s electronics production is $500 billion, and the component ecosystem is crucial to achieving this.
• 😀 Dixon anticipates that by 2027, their display module revenue could reach around 3,000 crores, with a significant impact on the company's margins.
• 😀 While the PLI scheme for mobile phones expires in March 2026, Dixon is confident that their expansion into displays and other components will continue to drive growth even without the incentives.
• 😀 Dixon is also pursuing partnerships in the camera module space and expects to finalize agreements within the next 4-5 months.
• 😀 The company has entered into a joint venture with Signify India for lighting products, which will help consolidate the lighting business and potentially lead to a significant export opportunity.
• 😀 Dixon expects its lighting business to grow from around 800-850 crores to approximately 2,000 crores by FY28, with the possibility of further growth through exports.

Q & A

What is Dixon Technologies' involvement with the Production-Linked Incentive (PLI) scheme?

Dixon Technologies is actively participating in the government's PLI scheme for electronics, which aims to incentivize local manufacturing of components like displays and camera modules. The company is looking to expand its manufacturing capabilities in mobile, IT hardware, and TV displays under this scheme.

How does the PLI scheme contribute to India’s electronic supply chain?

The PLI scheme helps boost India’s electronic supply chain by incentivizing the production of critical components locally. This reduces dependency on imports and supports the creation of a robust component ecosystem, which is essential for achieving the target of $500 billion in electronics production.

What specific components will Dixon Technologies focus on under the PLI scheme?

Dixon Technologies will focus on manufacturing display modules, camera modules, and other mechanical components. These components will help strengthen the overall mobile manufacturing ecosystem in India and increase the value-added components in devices.

What is Dixon’s forecast for its display module business, and when do they expect it to start contributing significantly?

Dixon expects its display module business, in partnership with HKC, to start contributing significantly in the third quarter of FY26. Initially, it is projected to generate INR 1,100-1,200 crore in revenues, with a target of INR 3,000 crore by FY27.

How does the component PLI scheme differ from the mobile PLI scheme?

The mobile PLI scheme primarily focused on finished products, incentivizing manufacturers to produce mobile phones in India, whereas the component PLI scheme targets non-semiconductor components such as mechanical parts, displays, and camera modules, which account for 40-45% of the value in a smartphone.

What revenue impact does Dixon expect from integrating display modules and camera modules into its operations?

Dixon anticipates that the integration of display modules and camera modules will increase its value addition from 17-18% to around 37%, significantly boosting revenues and improving margins due to the higher-value components being produced domestically.

What are Dixon’s margin expectations for its component business, and how does this compare to its mobile business?

Dixon expects its component business, particularly in display and camera modules, to generate double-digit margins once capacity is fully stabilized. This is significantly higher than the margins typically associated with the mobile business, which the company expects to improve by 120 basis points over the next couple of years.

What is Dixon’s plan regarding its lighting business and the recent joint venture with Signify India?

Dixon has entered into a 50/50 joint venture with Signify India to manufacture lighting products. This partnership is expected to boost Dixon's lighting revenue from INR 800-850 crore to INR 2,000 crore by FY28, with potential for further growth through exports.

What are Dixon’s revenue projections for its lighting business in the next few years?

Dixon projects that its lighting business will generate INR 1,400-1,450 crore in revenues by FY27, with the possibility of reaching INR 2,000 crore by FY28. This growth is driven by the joint venture with Signify and the expansion into professional lighting.

How does Dixon plan to mitigate the risk of PLI scheme expiration in 2026?

Dixon is focused on backward integration, cost optimization, and automation to ensure sustained profitability even after the PLI scheme expires in March 2026. The company believes that its component business and other initiatives will continue to drive growth and margin expansion beyond the scheme's duration.