Prime Minister Narendra Modi’s ‘Make in India’ mission has achieved some success in boosting mobile manufacturing and assembling in the country. The number of handsets manufactured in India nearly doubled in FY16 from the previous year, said Ravi Shankar Prasad, Information Technology Minister, at a recent event.
Data sourced from the Indian Cellular Association (ICA) and Consumer Electronics & Appliance Manufacturers Association (CEAMA) show that 110 million handsets were produced in FY16, compared with 58 million in FY15.
While Prasad exudes confidence and industry body ICA expects the FY17 to see 175 million handsets rolling out of Indian factories, a closer look at the numbers shows that more mobile handsets were produced in India before the Nokia factory was shutdown in 2014.
Between FY11 and FY14, about125 million mobile handsets were produced in India every year, peaking at 180 million in FY13. In other words, production came down 68 per cent in FY15 to 58 million units from peak levels of 180 million, following the Nokia factory shut down that year.
While Prasad’s excitement is justified, industry sources say there is still a lot of ground to cover. “Real manufacturing will take time to take off in the absence of the right ecosystem, namely, a component base in the country. While the government’s Make in India programme has given a leg-up to the manufacturing/assembling scenario here, the focus should be on getting the ancillary market in place. As long as component suppliers are not excited to set up base here, real manufacturing will be a far-fetched dream,” says Krishna Mukherjee, Analyst, CyberMedia Research.
Enhancement of the differential duty on mobile handsets to 10.5 per cent from the earlier five per cent has helped companies save cost by up to 10 per cent. Thanks to an expanding base – India is the second-largest smartphone market in the world after China – companies are now increasingly setting up their design and software hubs in the country and inviting their suppliers and contract manufacturers to set up shop here.
“Speed to market and local adjustments are very important these days. Since the market has reached a certain volume setting up units here is beneficial,” Atul Jain, Chief Operating Officer, LeEco India said. LeEco has begun local production of smartphones within a year of launch and is enjoying duty benefits of up to eight per cent of its cost, Jain said.
Pankaj Mohindroo, National President, Indian Cellular Association, said “the government under the Fast Track Task Force (FTTF) has set a target of achieving production of 500 million handsets, enhance exports to 120 million units and establish a components manufacturing base of Rs 50,000 crore by 2019-20.”
Manish Sharma, Executive Officer, Panasonic Corporation, who is also the President of CEAMA, said, “The government has provided Rs 10,000 crore under the Electronics Development Fund to support new entrepreneurs in the field of electronics. Mobile brands reckon that assembling lines will evolve into full-fledged manufacturing soon.”
Source: Business Standard
Image Courtesy: Business Standard
