India is one of the fastest growing smartphone markets in the world – it has become a natural choice for companies to expand into. In addition, with the approval of Phased Manufacturing Program (PMP) by the government of India, local mobile phone manufacturing industry in the country is moving towards maturity at rapid pace.
The government’s initiation is aimed to establish local mobile phone manufacturing eco-system in India by increasing domestic value addition and PMP is playing key role in this regard. It (PMP) has extended financial incentives and lowered tariffs phase-wise till the fiscal year 2019-2020 in order to encourage local mobile phone components manufacturers who will be supplying the parts to domestic handset manufacturers.
The program has identified 12 different mobile parts such as adapter, UCB cable, camera module, etc. which have to be manufactured locally by the components producers in next few years.
With PMP in effect, the import of finished handset in India is discouraged because the import of completely made mobile phone is costlier by more than 11% in comparison to locally made handsets. This means the program is extensively promoting locally made mobile phones in India.
To take the benefit of PMP and tap into the growing opportunity of handset market in India, both types of companies—mobile phone manufacturers and mobile phone components manufacturers—are heavily investing in the country.
South Korean based Samsung recently announced to invest almost US$ 763 million to double its mobile phone capacity along with other electronic goods in its Noida plant. Similarly, global chipmaker Qualcomm announced to fund US$ 8.5 million to its Innovation Labs based in Hyderabad and Bangalore earlier this year.
A few companies also released some Made in India phones in H2 2015 (Xiaomi Redmi 2 Prime, Moto E, Gionee F103, etc.)
Currently, about 60% of the local production is Smartphones; this share will exceed 90% by 2018 – reducing import dependency gradually.
Increasing local manufacturing of smartphones in India will make it a net exporter of phones by 2020. Automation is an enabler for local manufacturing and assembling of smartphones, and is a growing opportunity for automation vendors in India.
Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at firstname.lastname@example.org
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