India’s mobile manufacturing policy seems to be on the right track as ‘Make In India’ initiative has started giving results. A latest report suggest that India will be global manufacturing hub by 2020, writes Parul Manchanda…
NEW DELHI, AUGUST 12, 2017: Indicating that Prime Minister Narendra Modi’s ‘Make In India’ programme is the right on track, a survey has said that by 2020 almost 96% of mobile phones sold in India will be locally manufactured, while localisation rate will go up from 6.1% in 2016 to 25.8% in 2019.
With 292 million (29.2 crore) users, India is the second largest smartphone market in the world today, and this number will cross 400 million (40 crores) by 2020, says the “Indian Mobile Phone market: Emerging opportunities for fulfilling India’s digital economy dream”, published jointly by the Internet and Mobile Association of India (IAMAI) and Enixta Innovations.
The survey also revealed that 38 new mobile manufacturing units have been set-up between September 2015 and October 2016, with manufacturing capacity of 20 million (2 crore) units per month, generating close to 40,000 direct jobs and 1.25 lakh indirect employment.
India is projected to be the single biggest market for global smartphone sales in the next few years. In financial year 2015-2016 India manufactured mobile phone worth Rs.54,000 crore locally, registering an increase of 186% compared to last year. Special incentives for mobile phones manufacturing under ‘Make In India’ programme will reduce India’s dependence on imports. This will also help make mobile phones cheaper, the report said.
According to the report, the demand for the mobile phones in India is largely met through imports. The overall localisation rate in domestic manufacturing stood at 6.1% in 2016, which is far below the localisation rate among countries like Vietnam. Much of the domestic mobile phone production in India is limited to assembling only. This low level of local value addition is due to a weak manufacturing eco-system which in turn stems from limited capabilities across various stages of the manufacturing value chain.
According to Ministry of Electronics and IT Additional Secretary Dr. Ajay Kumar: “In the next 5 to 10 years, 25%-30% of the global economy will be actually determined by the digital economy. Mobile is at the centre of all the plans of ‘Digital India’. Digital payments are driven through mobile, which in turn will increase the demand for mobile phones in the country. Internet economy is the biggest opportunity for the growth…Touch panels, Lithium ion battery and chipsets are the key areas in which we need to work. These are the difficult areas and has significant value,” he added.
Indian Cellular Association President Pankaj Mohindroo said: “Government of India took a very bold and courageous step to impose the basic custom duty on mobile phones. Local manufacturing value addition of more than 39% can be achieved for smartphones by 2019, while 25% has already been surpassed. India took only four years to achieve this whereas China took 20 years for the same. Chinese investment of $2-3 billion in India over the next two ears looks like a real possibility along with employment for 1-2 lakh people. This would give a major boost to the ‘Make in India’ initiative of making India a global manufacturing hub.”
KEY FINDINGS OF THE REPORT
- 38 new mobile manufacturing units have been set-up between September 2015 and October 2016, with manufacturing capacity of 20 million units per month, generating close to 40,000 direct jobs and 1.25 lakh indirect employment.
- The states of Uttar Pradesh, Andhra Pradesh and Telangana have emerged as the mobile phone manufacturing hubs in the country with half of the 38 manufacturing units being established in these states.
- The size of the domestic mobile manufacturing industry in FY 2019-20 is expected to be Rs.1.35-lakh crore as compared to Rs.94,000 in FY 2016-17.
- For smartphones, the market size of domestic manufacturing in FY 2019-20 will be Rs.1.20-lakh crore.
- 2 out of every 3 mobile phone sold in India in 2016 were domestically produced. It is estimated by 2020 almost 96% of the mobile phones to be sold in India will be locally manufactured.
- In 2016, the local value addition for smartphones stood at 6.1%, largely limited to assembling and packaging of SKD (semi knocked down) units
- Local manufacturing value addition of more than 25% can be achieved for smartphones by 2019, translating into Rs.31,000 crore of local component sourcing and local assembly.
- Battery pack, non-electronic parts, accessories, packaging have high local sourcing possibilities. Medium local sourcing possibilities for display/ touchscreen and camera, while main electronic components seems to have low local sourcing capabilities.
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