India is expected to increase its local component and assembly sourcing rate for smartphone manufacturing to 25.8 percent in 2019 from 6.1 percent in 2016.
The increase in the use of domestic components and other sources will translate to INR 31,000 crore in value.
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There is a possibility to build sourcing capabilities for mobile phone components such as battery pack, non-electronic parts, accessories, packaging etc. though the main electronic components will require a longer tenure to be sourced locally, said the Internet and Mobile Association of India [IAMAI] & Enixta Innovations.
“In the next 5 to 10 years, 25 percent or 30 percent of the global economy will be determined by the digital economy,” said Ajay Kumar, additional secretary, MeitY.
The localisation rate for domestic manufacturing in 2016 stood at 6.1 percent, which is far below the localisation rate among countries like Vietnam.
Much of the domestic mobile phone production in India is limited to assembling/ packaging of SKD (Semi-Knocked Down) kits. This low level of local value addition is due to a weak manufacturing eco-system which in turn stems from limited capabilities across various stages of the manufacturing value chain.
Phone companies have set up 38 new mobile manufacturing units between September 2015 and October 2016, with manufacturing capacity of 20 million units per month, generating close to 40,000 direct jobs and 1.25 lakh indirect employment.
Uttar Pradesh, Andhra Pradesh and Telangana emerged as the mobile phone manufacturing hubs in the country with half of the 38 manufacturing units being established in these states.
The size of the domestic mobile manufacturing industry in FY 2019-20 is expected to be Rs 135,000 crore as compared to Rs 94,000 in FY 2016-17.
Te market size of domestic smartphone manufacturing in FY 2019-20 will be Rs 120,200 crore.
2 out of every 3 mobile phone sold in India in 2016 were domestically produced. Almost 96 percent of the mobile phones to be sold in India will be locally manufactured by 2020.
Local manufacturing value addition of more than 25 percent can be achieved for smartphones by 2019, translating into Rs 31,000 crore of local component sourcing and local assembly.
