Micromax to invest Rs 500 cr in R&D

Home-grown smartphone manufacturer Micromax plans to invest Rs 500 crore in R&D (research & development) operations as it looks to expand local manufacturing while strategising its comeback in India’s smartphone market. Micromax co-founder Rahul Sharma told Economic Times that the government’s production linked incentive (PLI) scheme will help the company to take on the Chinese brands that currently dominate the Indian market with over 70% share.

Xiaomi leads the smartphone market in India with 30% market share and a user base of over 90 million.

Micromax, at its peak in 2014, had risen to become the No.2 smartphone player in the country, but has since lost ground to Chinese companies that began flooding the market from 2016 onwards.

Rahul told the newspaper that the new PLI scheme brings parity between foreign and Indian players and with government support, he is hopeful that Micromax will be able to take the Chinese rivals head-on with aggressive pricing.

However, calling for stricter data localisation, he said, “All this data is going to China despite them saying we have local servers. Everything needs to be in India and that should be the priority.”

Micromax had decided to quit the smartphone space in India two years back as it couldn’t compete against the prices offered by the Chinese brands. However, PLI will solve the pricing and allow them to make a grand comeback, Rahul Sharma said.

Micromax has restricted itself to sale of feature phones in India after its exit from the smartphone market but still makes mobile handsets for other brands as a contract manufacturer.

Rahul Sharma said that handset brands can source 60% material locally for mobile phones due to the phased manufacturing programme that has helped build the ecosystem.

Meanwhile, industry body India Cellular & Electronics Association (ICEA), which represents leading mobile phone makers, has said that companies have pledged investments worth Rs 11,000 crore under the PLI scheme.

The PLI scheme was announced by the government in the electronics manufacturing segment on April 1 under the National Policy on Electronics (NPE) 2019. The scheme provides an incentive of 4-6% on incremental sales of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20). The Minute