Government should push next phase of ‘Make in India’ – report - Mobile World Live

Government should push next phase of ‘Make in India’ – report

22 NOV 2016

India’s ‘Make in India’ push has boosted local production of mobile phones from just 14 per cent of total sales in 2014 to 67 per cent this year, with that percentage forecast to rise to 96 per cent by 2020, according to Counterpoint Research.

During the last 18 months, 40 new mobile phone assembly facilities and 12 component/accessory manufacturing units have opened in the country. Despite these Digital India initiatives, the local value addition will be just under 6 per cent of the total value of $11 billion worth of components going into the 267 million phones forecast to be sold this year, Counterpoint said. Most OEMs still import mostly semi-knocked down (SKD) components.

Comparatively, other global manufacturing hubs have much higher localisation rates. China’s is almost 70 per cent, and South Korea and Taiwan both have crossed the 50 per cent threshold. Emerging hubs such as Vietnam and Brazil have local value additions of around 30 per cent and 20 per cent respectively.

Counterpoint research director Neil Shah said it is critical to transform the current manual SKD level assembly and minimal amount of local component sourcing into a large-scale manufacturing ecosystem over the next few years.

“There is hardly any incentive or effort to meaningfully invest in research, design, development, advanced surface mount technology (SMT) led printed circuit-board manufacturing, or attempts to attract key component suppliers to form a robust local manufacturing ecosystem,” he said.

A phased local value-addition plan, proposed in a joint study by IIM Bangalore and Counterpoint, would increase locally sourced components to an estimated $15 billion from 2016 to 2020 and create more than a million direct and indirect jobs in India.

IIM Bangalore professor Chirantan Chatterjee, the lead author of the study, said: “The government’s role in driving the right policy reforms, such as effective duties on key components along with attractive incentive structures, can drive key suppliers to India.”

Counterpoint said India is on track to have more than half a billion smartphone users within the next five years. Earlier this year the country surpassed the US to become the second largest global smartphone market in terms of users.

Author

Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

Read more

Related

Tags