The government's Make in India initiative to transform the country into a manufacturing hub is finally yielding results in the mobile handset segment. Backed by the setting up of electronic clusters, chip fabrication and assembling units, there has been a steep jump in the domestic manufacturing of handsets. As per Indian Cellular Association (ICA), the overall value of handsets manufactured surged by 186% in FY16 to Rs 540 billion. Nearly 50% of the mobile handsets sold where produced within the country. Not only the Indian handset makers such as Micromax, Lava and Intex, even Chinese companies such as Vivo and Xiaomi are increasingly localising their manufacturing operations. The industry body has projected mobile phone production to grow by 74% and reach Rs 940 billion in FY17.
However, with a large part of the components used in mobile phones still not available in the country, most of the local units remain at best assembly lines. The problem is further compounded by low duties on imported components. Additionally, companies also grapple with problems such as poor infrastructure and logistics facilities, land acquisition woes, lack of skilled labour and tough labour laws. So the local value addition for most of the companies continues to remain low. Therefore, if India is to graduate into a manufacturing powerhouse, it needs to work towards overcoming all these hurdles. It also needs to undertake reforms to incentivise research & development and intellectual property rights to fully reap the benefits of domestic manufacturing.
Data Source: The Hindu Businessline, Indian Cellular Association