Chennai: India is closer to achieving self-sufficiency in meeting domestic demand for mobile phones on the back of rising domestic production and falling imports. Both the quantity and value of feature phones and smartphones (including accessories) imported by India declined significantly in the past three years, data filed by the commerce ministry in Rajya Sabha last week showed. Importing around 270 lakh units in 2018-19, India has managed to reduce import of mobile devices by 64% from 758 lakh in 2016-17. The value of such imports declined almost 57% from 2016-17 to 2018-19 to record at $1,616 million. The domestic demand for mobile phones for 2018-19 stood at around 290 million units, as per India Cellular and Electronics Association (ICEA) estimates. Presenting the data, commerce minister Piyush Goyal attributed the imports reduction to significant addition of manufacturing capacity in the sector in past four years, a Phased Manufacturing Programme (PMP) for making mobile handsets and components in India, and 100% FDI for manufacture in the sector. “Most of the major brands have already set up their own manufacturing facilities or are in the process of doing so or have sub-contracted manufacturing to Electronics Manufacturing Services (EMS) companies operating in India,” he said in a statement. Pankaj Mohindroo , chairman , ICEA said that a field survey found around 268 new manufacturing units to be operating in India during June 2018, from only 3 in 2014. Smartphone maker Vivo currently has two manufacturing facilities at World Trade Centre in Greater Noida and employs about 10,000 people. “With expansion in our manufacturing facility, we recently added 8.4 million units taking the company’s total capacity to more than 33 million annually,” a Vivo India spokesperson said.
Xiaomi started local manufacturing in August 2015, and has seven smartphone manufacturing plants in India today in partnership with EMS players Foxconn and Flex, situated across Noida, AP and TN. “More than 99% of the smartphones we sell in India are manufactured locally, and we have a production capacity of three smartphones per second during operational hours,” a Xiaomi spokesperson said.
However, the import reduction comes at a time when the ICEA has urged the govt to revisit reduction of export incentives for the industry. The Director General of Foreign Trade on December 7 reduced duty credit for mobile exporters under Merchandise Exports from India Scheme (MEIS) to 2% effective January 2020 from 4% earlier.
The ICEA in a letter to the commerce, electronics and finance ministry, urged them to review the move as this will hamper existing export orders of the players. and prevent India from taking advantage of the US-China trade tensions. “There is a deep distress in the sector at the same time and more than 100 units have closed down,” ICEA’s Mohindroo said.