Indian mobile phone makers slashed working hours and output amid a slowdown in device sales caused by a government strategy to remove high-value currency notes from circulation.
Taiwan-based Foxconn and local Indian manufacturers plan to idle factory workers at many sites after device sales dropped by 50 per cent in the wake of a government decision to eradicate INR500 ($7.40) and INR1,000 notes – a strategy referred to as demonetisation.
According to the Economic Times, Foxconn, the world’s largest electronics contract manufacturer, placed a quarter of its 8,000 factory workers in India on paid leave for two weeks as it moves to cut production by 50 per cent. Foxconn produces devices for China’s Xiaomi, Oppo and Gionee as well as Apple and many others.
Local manufacturers Intex, Lava, Karbonn and Micromax also plan to lay off between 10 per cent and 40 per cent of their workers to reduce production after the government’s demonetisation announcement on 8 November pulled trillions of rupees out of circulation and slowed consumer demand, the Times reported.
Lava will close a plant that employs about 5,000 people for a week starting today, the publication said. Micromax already slowed production at its Rudrapur and Telangana facilities.
The newspaper said the elimination of INR500 and INR1,000 notes created a cash shortage, particularly among low-income households. Mobile phone sales were curbed as a result because most are purchased in cash.
The government’s ‘Make in India’ push boosted local production of mobile phones from 14 per cent of total sales in 2014 to 67 per cent this year, according to Counterpoint. In the past 18 months, 40 new mobile phone assembly facilities and 12 component and accessory manufacturing units have opened in the country.