Wearables, hearables makers ramp up local manufacturing

Large companies selling wearables and headphones have begun expanding local manufacturing in a bid to improve margins, take more control of supply chains and reduce their dependence on Chinese imports amid a push to make mobile phones in India.

Optiemus Electronics, a homegrown manufacturer approved to receive benefits from the government’s production-linked incentive (PLI) scheme for mobile phones, has started making “dozens” of hearable and wearable products at its Noida plants.

The company is making products for Noise—a brand owned by Gurugram-based Nexxbase Marketing Pvt. Ltd—which as per International Data Corporation (IDC) leads the wearable market in India with a 26% share of shipments in Q3CY21.

The hearables market includes truly wireless (TWS) headphones, which fit in a person’s ear and connect to phones through bluetooth.

“In the coming year, we plan to focus on a larger portfolio to manufacture in India itself. In the initial phase, we are planning to design and manufacture TWS in India with Optiemus Electronics,” said Amit Khatri, co-founder of Noise. The firm is planning “significant investments” to go local next year.

A. Gururaj, managing director at Optiemus Electronics, said the firm will increase headcount by around 1,000 in 2022. “Along with Noise, we are working with other brands as well, and by next year we will double the capacity of hearables and wearables that we are manufacturing right now,” he added.

Optiemus is opening a manufacturing facility in Noida—its third in India—which will be operational in the next four to five months.

Local demand for wearables and hearables has skyrocketed after the pandemic. IDC’s latest data shows India’s wearable market grew by 93.8% year-on-year (y-o-y) in Q3CY21. A total of 23.8 million units were shipped during the quarter. The post-pandemic boom in the segment has also propelled Indian brands such as boAt into the list of the top five global wearables.

boAt, which is said to be preparing for an initial public offering worth ₹3,500 crore, has also started making several of its hearables in India. It set up a new research and development centre in Bengaluru this year.

“The pandemic gave us an opportunity to manufacture internally and now we are trying to grow as a make in India brand,” said Vivek Gambhir, CEO, boAt (Imagine Marketing Pvt. Ltd).

Tarun Pathak, research director at Counterpoint, said that a few quarters ago, almost 100% of the segment was dependent on imports, which has started to change. “Local manufacturing will allow brands to ship faster and have more control over the supply chain. This also helps since they are already designing here. It will also help brands save costs. Since the average selling price of these products is not very high, every cent saved on these devices is big for these brands,” he said.

This has also attracted new brands to the segment. Ambrane, which has mostly been known for selling power banks in India, is planning to venture into smartwatches in 2022. Ashok Rajpal, MD of Ambrane India, said the company is planning to expand its manufacturing footprint and will move to a new facility near Delhi in the next two-three months. “The new facility will have three times more capacity than the existing plant, which produces 500,000 units a month,” he added.

Ambrane will also use the facility for producing batteries for electric vehicles (EVs). “We are in talks with some companies so that we can do it (produce EV batteries) on a bigger scale,” he said. “Most of our products and components are currently coming from China. In 2022, we are expecting our dependency on China to come down as we will buy most components from India,” he added.

Rajpal said the government is planning to introduce a PLI scheme for hearables and wearables and Ambrane is planning to participate in it. Gururaj added, “Manufacturing in this segment is labour-intensive and India has an advantage over other countries. With the government’s help, India can be the country of choice for manufacturing of these categories for the world.” Livemint