Make In India: Mobile Phone Production To Soar

by Sohini Bagchi    Feb 08, 2016

smartphones

The government’s ‘Make in India’ and ‘Digital India’ initiatives are acting as gateways to spur growth of India’s tech and telecom industry.

As many as 50 new mobile phone factories were reportedly set up in the country during the past 10 months, creating employment for 20,000 people. This year, India produced 100 million smartphones as compared to 45 million last year with leading companies setting up their manufacturing base in the country.

“The number of phones being manufactured was 10 million sometime back (which increased) to 45 million last year and 100 million this year. The time has come when we will reach 500 million, may be in 2 years,” Telecom Secretary J S Deepak told PTI.

“Mobile phone manufacturing in the country may reach 500 million units in coming two years on the back of good base of talent and an incentive policy,” he predicted.

Read more: This Year, Smartphones To Overtake Feature Phones In India

According to agency reports, the government is making efforts to reduce imports of electronic products and meet requirement of domestic market through indigenous production. The government has received proposals worth Rs 1.13 lakh crore in the electronics manufacturing segment from major brands under the modified special incentive package scheme (M-SIPS).

The scheme offers capital subsidies to large investments in electronics manufacturing and system design and has been extended till July 2020, which was earlier valid till July 2017.

Broadband, local content issues

Experts also believe that making high-speed broadband available to individuals in rural areas is a priority of the government. According to a survey by the Department of Telecom (DoT), while Internet users may have touched 400 million, broadband users are in the range of 40-50 million and growing very slowly in rural areas. Trai recommended public private partnership (PPP) model for rolling out broadband network in rural India which has missed various deadlines of completion.

Unless the digital divide is reduced the problem can be even more challenging to handle, as at present there only 14 per cent rural households which are digitally literate, it said.

However, the growth potentials are immense. At the recent IESA Vision Summit, Ajay Kumar, additional secretary of Department of Electronics and IT (DeitY), said this sector has a potential to contribute no less than 25% to the country’s GDP as it is expected to be $1-trillion opportunity in next 5-7 years. Kumar further added that this opportunity includes “$400 billion of hardware, $350 billion of software and $250 billion of telecom and Internet of Things.”

Read more: India’s 4G Smartphone Shipments Grow 3-Fold In Q3

“There were 159 electronic system design and manufacturing (ESDM) production units established in India last year and the technology sector is expected to be $1 Tn opportunity in India in the next 5-7 years,” he said. Out of the $1 trillion opportunity for India, hardware manufacturing is estimated to grow into a $400 billion industry, software services a $250 billion space and telecom and IoT making up the other $250 billion, within the next five to seven years.

Given the high demand and increased import duties on electronics, vendors are increasingly opting for local assembly of devices. Global electronics giants such as Samsung, LG and Foxconn have all setup factories in India, with proposed investments in local electronics manufacturing having grown six-fold to $16.8 billion in the last 20 months, according to reports from IESA.

According to M. N. Vidyashankar, President of the IESA. “ESDM startups are key to India’s $400B ‘Make in India’ opportunity.” He also emphasized on the importance of local content, on the basis of which technology and products can be scaled in a country, where the majority still relies on local language for communication.

The government has released a draft policy for supporting local languages and making machine-translation into local languages a reality in India.

Indo-China collaboration

At the same time, India and China are in talks to enhance handset manufacturing ecosystem in the country. “Chinese companies are keen to participate in the ‘Make in India’ campaign and establish mobile handset and component manufacturing facilities here,” Mobile World (Shoujibao) Shenzhen Founder and CEO Wu said in a statement.

Last year a number of Chinese manufacturers showing interest in Narendra Modi Government’s Make in India and Digital India ventures, setting up assembly plants to churn out devices in the country, rather than importing finished goods from China. Of the notable companies that have already joined the Make in India bandwagon, Xiaomi has begun assembly of its smartphone, the Redmi 2 Prime, out of manufacturer Foxconn’s assembly plant at Sri City, Andhra Pradesh.

Lenovo-undertaken Motorola has also started assembling the Moto E smartphone at the mobile phone assembly facility at Sriperumbudur, Chennai. 

Gionee too has partnered with Foxconn to manufacture its F and P series smartphones at the Sri City facility and F103 is first from its stable, claims to have sold over 7 million devices in the country so far and aims to double sales with domestic manufacturing.

Coolpad and Vivo too have already started manufacturing in India. Going forward, more than 80 mobile phone ecosystem players from China will look at manufacturing possibilities in India - which could give a massive push to the government’s ‘Make in India’ initiative.

In the coming months, component makers like Holitech, Wingtech, Galaxy Core, Poxiao, Sprocomm , Sinwoo, HuaLong, Wind-Mobi, Nuwei and Ramos will be among the participants that are expected to forge partnerships with Indian brands.

Electronics majors are also banking heavily on the upcoming Union Budget for greater boost in their manufacturing. “With Chinese economy slowing down and international financial agencies predicting India to be the fastest growing large economy, all eyes are on India and these expectations will be realized only if the Finance Minister presents abudget that is focused at maintaining the growth while addressing the government’s social obligations,” said Shripal Gandhi, Founder & CEO of Swipe Technologies.

Anirudh Dhoot, Director, Videocon said, “We are positive that the government will announce a budget that will favour manufacturing and support Government’s Make in India and Startup India campaigns.”