The growth momentum in mobile phone manufacturing will continue, with the country likely to produce devices worth Rs 4-4.5 trillion between FY22 and FY24 led by the production linked incentive (PLI) scheme, which is in the second year for most companies, ratings agency Crisil has said.
Due to the uptake in local manufacturing, dependence on China has been reducing while India’s share in global exports of mobile phones, which is currently insignificant, is set to rise in coming years, the report said.
“With domestic output rising, India has become largely self-sufficient on the consumption front. In fiscal 2022, the country saw a 15-20% increase in mobile consumption to Rs 2.5 trillion. A fall in the lifecycle of the mobile, increasing digitalisation, and easy financing terms were the major factors that contributed to the growth,” Crisil said. It said the momentum is likely to continue this and next fiscal, boosting consumption to Rs 3.5-4 trillion by FY24.
As per data, after logging a 33% compound annual growth rate (CAGR) between FY16 and FY21, domestic mobile production is estimated to have grown 24-26% in FY22. “Despite the ongoing chip shortage, three of the global manufacturers met PLI production targets during the fiscal,” the report said.
Crisil Research expects the growth momentum in production to sustain, with a 22-26% CAGR between FY22 and FY24 to Rs 4-4.5 trillion in value terms. As a corollary, the country’s mobile imports decreased 33% on-year in FY22.
“Dependency on China reduced to 60% from 64% in fiscal 2021, and is expected to fall further in the medium term. However, with rising production, imports of electronic components essential for mobile assembling/ manufacturing also increased 27% on-year,” it said.
Last fiscal was significant for the country as mobile exports surged 56% on-year with support from phased manufacturing programme and PLI. The exports are expected to grow further and touch Rs 1-1.2 trillion over FY23 and FY24, it said.