IAMAI report moots road map to manufacture 1 billion handsets annually

By: |
Published: July 25, 2019 10:39:15 PM

With initiatives like the phased manufacturing programme, while India did succeed in attracting some companies to begin assembling phones here, the larger ecosystem comprising the vendors and suppliers of high-value components and assemblies did not shift to India.

IAMAI, mobile phone manufacturing, industry news, China, Vietnam, South Korea, TaiwanThe report evaluates the status of the domestic mobile manufacturing ecosystem and the impact of a specific type of tariff-based measures adopted by India to fuel local capacity.

India’s mobile manufacturing lacks scale and depth despite its ambition to become global production hub, and the country now needs to “think big” by manufacturing at scale, producing high-end phones, and incentivising exports, according to a latest report. The report, titled ‘Make in India 2.0 (Revisiting Mobile Manufacturing)’ and published by the Internet and Mobile Association of India (IAMAI), said the global handsets market is worth about USD 467 billion (about Rs 32 lakh crore), and this demand is being met almost entirely by China, Vietnam, South Korea and Taiwan.

“India does not play any meaningful role, owing to severe limitations on its manufacturing capacity. India also lacks the supply chain that feeds into manufacturing mobile phones,” said the report. It noted that the import substitution strategy suffers from several downsides because it relies only on protections instead of rewarding production.

With initiatives like the phased manufacturing programme, while India did succeed in attracting some companies to begin assembling phones here, the larger ecosystem comprising the vendors and suppliers of high-value components and assemblies did not shift to India.
“The net result was that while India managed to reduce the imports of fully built mobile phones, it continues to incur forex (foreign exchange) outflow on account of imports of mobile phone components and assemblies,” said the report.

The report evaluates the status of the domestic mobile manufacturing ecosystem and the impact of a specific type of tariff-based measures adopted by India to fuel local capacity. It also charts out a road map to manufacture 1 billion handsets annually. The report pointed out that in 2018-19, India exported mobile handsets worth USD 1.4 billion compared to USD 2.7 billion in 2012-13. Also the production of mobile handsets has reached 225 million units in 2017-18.

To produce 1 billion handsets annually with export revenue of USD 200 billion, India must ensure the scale of manufacturing increases manifold, IAMAI said. “India’s mobile manufacturing currently lacks scale, depth and vision. India aspires to become a global manufacturing hub of mobile phones but its current turnover is unimpressive vis a vis its potential,” it said.

In light of the challenges faced by Indian mobile manufacturing, an alternate strategy needs to be mulled over where production is incentivised and instead of import substitution, the focus shifts to export-oriented strategy. The report recommended adoption of the multi-pronged approach that prioritises large-scale manufacturing, manufacturing high-end phones, taking an ecosystem approach, and incentivising exports.

India should focus on attracting large-scale manufacturing and enhance local value integration, it said adding that the country also needs to rapidly capture the markets for the high-end smartphones. “Government of India must, therefore, provide both productions based incentives as well as export-oriented incentives to encourage Indian domestic manufacturing,” the report added.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Tata Motors first-quarter loss nearly doubles, reports net loss of Rs 3,679 cr; JLR challenges continue
2Liquidity steps for NBFCs too little, too short-term, says Fitch report
3Can we trust Facial Recognition: Cause of alarm and regulations