The future of India’s mobile manufacturing industry

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In the absence of any major domestic mobile phone manufacturers, large imports of mobile phones have contributed to a widening of India’s trade deficit. Mobile manufacturers have always been attracted to China for setting up their manufacturing unit, but post-COVID-19 India has a great opportunity to attract mobile companies to set up their manufacturing units in India.

The mobile manufacturing industry of India is targeting $100 billion mobile phone exports by 2025. The industry also aims to export mobile components worth $40 billion during the period, and this is all part of its “Restart, Restore and Resurgence” plan revealed by the India Cellular and Electronics Association (ICEA) on Thursday.

Pankaj Mohindroo, chairman, ICEA said that the mobile manufacturing and components sector is ready to lead India’s post-COVID-19 exit strategy. He also added that production has started in India with the easing of the lockdown and the industry hopes to achieve 100% capacity by August. With all this happening the mobile manufacturing industry in India could become one of the most employment opportunity generators in India.

 The report submitted by ICEA to the government presents a plan to transform India’s mobile manufacturing sector over the next few years. “Mobile phones, and electronics in general, are the largest imported segment in the world,” said the report. The size of the global smartphone market was estimated at $495 billion in FY2018 and is expected to reach $647 billion.

The targets set in the report are in alignment with the government’s National Policy on Electronics 2019 (NPE 2019). It makes note of the recent schemes and plans for electronics manufacturing announced by the Ministry of Electronics and Information Technology (MEITY), and expects these schemes and plans to help the industry grow. For India to become a global player in the mobile manufacturing sector, it will need access to the global market, ability to attract large scale global value chain (GVC) investments, labor arbitrage, global presence, advanced technology, low cost of inputs, domestic ecosystem and competitiveness.

The global lead mobile manufacturing firms have already made initial investments, but they have limited their operations to assembly so far, i.e. they bring manufactured parts from other countries, and only the process of assembling the parts to form the final product takes place in India. Global lead firms must be incentivized by India to attract and encourage investments to boost manufacturing and exports.

It is seen that many firms are not anymore interested to continue with manufacturing their products in China due to global pandemic. Renowned manufacturers such as Wistron, Foxconn, and Pegatron are trying to implement their production facilities outside of China. India may face fierce competition from other south-east Asian peers like Vietnam, Malaysia, Thailand, and Indonesia. India has already notified schemes in compliance with World Trade Organization (WTO) regulations. India could get huge benefits in employment, and GDP growth if we establish a timely, smooth implementation, and disbursement without any delay.

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