India has replaced Vietnam as the world’s second largest mobile phone manufacturer. Between 2016 and 2022, India is expected to attract investments worth Rs 44,265 crore in the smartphone manufacturing sector. Currently, China is the largest manufacturer of mobile phones in the world.
From just three mobile manufacturing units in 2014, India witnessed a jump to 268 smartphone and allied services manufacturing units until 2018. In 2017, 82% of the mobile phones used in India were manufactured domestically.
Among the 268 smartphone and allied services manufacturing units, 37% are mobile plants, 38% are into manufacturing adapters for mobile phones, while 19% are mobile battery manufacturing plants; the rest 6% are factories that are into manufacturing of wired headsets, USB cable, mechanics, etc, according to a report of the India Cellular and Electronics Association (ICEA) released earlier this year.
Some of the major smartphone companies that have set up their product assembly and packaging units in India include Gionee, Xiaomi, Videocon, Jivi Mobile, Lava, Samsung, and Comio Intex. Mobile manufacturing company Lava has set up its board processing unit in Noida of Uttar Pradesh.
Tech giant Foxconn—a Taiwanese multinational electronic manufacturing company that manufactures electronic products for Blackberry, Apple, Nokia, Xiaomi and Sony Playstation—has set up a Rs 34,000 crore display fab manufacturing unit in Sriperumbudur in Tamil Nadu. Chinese mobile manufacturing company iVoomi has set up a research and development centre in India, with an investment of Rs 250 crore.
The ICEA believes that the increasing demand for smartphones in India and favourable government policies, coupled with the implementation of the Phased Manufacturing Programme (PMP) under which differential import tariffs are being imposed on mobile phone components in stages, are some of the reasons for this exponential growth of the mobile manufacturing sector in India. The ICEA also believes that by 2020, India’s production of smartphones will exceed its demand and it is then that India can start exporting smartphones to the world.
The Ministry of Electronics and Information Technology has also recently implemented the National Policy on Electronics-2019, to boost the manufacturing of electronic products in India. The policy also sets an ambitious target of achieving a turnover of $400 billion in electronic manufacturing in India by 2025 and a target of producing one billion mobile handsets by 2025.
Industry experts believe that this is the best time for India to capture the electronic manufacturing sector in the backdrop of the US-China trade war.
Rajesh Sharma, advisor at ICEA, told The Sunday Guardian said that it is a great opportunity for India to grow in the electronics manufacturing sector. “Here the labour cost is very low, we have abundant manpower and skilled labour. The government needs to cash in on this opportunity to attract more and more investments into India.”
Sharma also pointed out that the government needs to make the investment conditions more favourable to attract more such investments. He said, “The cost of land in India is a big problem, while the quality of power and power fluctuations is another major problem. The government needs to incentivise investments by providing tax reliefs to companies and removing bureaucratic red tape, among such other measures.”―The Sunday Guardian