Study says India will become global manufacturing hub of mobile phone components.
A study conducted by Indian Institute of Management-Bangalore in association with technology research firm Counterpoint Research has found that Indian mobile phone market is expected to witness a boom as the country is set to consume $80 billion worth of mobile phone components in five years.
The study noted that this expansion will help India become the global manufacturing hub of mobile phone components, reported Indo-Asian News Service.
Releasing the report, Aruna Sundararajan, Secretary, Ministry of Electronics & IT, Government of India, said, “India can potentially be a world leader in mobile phone manufacturing ecosystem and this has to be done in a phased manner.”
The study found that the contribution of domestically manufactured mobile phones has increased from 14 percent in 2014 to 67 percent in 2016 and is estimated to reach 96 percent by 2020.
However, 67 percent of the handsets manufactured in India contributes to just 6 percent of the ‘true local value addition’ with most of the OEMs still importing Semi Knocked Down components (SKDs). Out of 50 facilities from OEMs to ODMs to EMS to component suppliers involved in the manufacturing of mobile phones in India, almost three-fourth are Indian manufacturers, followed by Taiwanese with 10 percent and Chinese with 10 percent, said the report.
“During the last 18 months, 40 new mobile phone assembly units and 12 new component/ accessory manufacturing units have started in the country as part of Digital India initiatives. But mobile phones itself have the potential to create electronic manufacturing to the tune of over USD 250 billion industry. Research efforts like the IIMB study are welcome because they contribute to the understanding and sustaining the momentum of growth in the sector,” said Ajay Kumar, Additional Secretary, Ministry of Electronics & IT.
Under the phased local value addition plan, the components under Phase I plan (2016- 2018) like Battery, Chargers, Cables, Housing, Packaging and others can be localized completely, thus driving the ‘true local value addition’ from current 6 percent to 17 percent in just two years.
Components under Phase II plan (2018-2020) like Display, Camera, and their sub-components can further increase value addition from 18 percent to 32 percent by 2020.
Phase III plan will include the possibility of localizing the semiconductor components post 2020 including setting up semiconductor fab and thus driving the ‘true local value addition’ beyond 33 percent.