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Domestic mobile manufacturing industry to touch Rs1.35 trillion by FY20: report

LiveMint logoLiveMint 02-08-2017 Rozelle Laha

India’s domestic mobile manufacturing industry is projected to touch Rs135,000 crore by FY2019-20, up from Rs94,000 in FY2016-17. Of this, the market size of domestic manufacturing of smartphones is expected to be Rs120,200 crore by FY2019-20, industry body Internet and Mobile Association of India (IAMAI) said in a report on Wednesday.

According to the report titled Indian Mobile Phone market: Emerging Opportunities for fulfilling India’s Digital Economy Dream, published jointly by IAMAI and Enixta Innovations, a start-up focusing on artificial intelligence, “In the backdrop of such strong growth potential for smartphone adoption, India is set to increase its domestic localisation rate from 6.1% in 2016 to 25.8% in 2019, which translates to Rs31,000 crore in value generated through local sourcing and assembly.”

The report also estimated that by 2020, about 96% of mobile phones to be sold in India will be locally manufactured. In 2016, two out of every three mobile phone sold in India were produced locally.

The projections come in the wake of Reliance Jio Infocomm Ltd’s launch of JioPhone, which essentially is a feature phone but promises to disrupt the traditional handset market as it offers 4G services with the device. Other telecom companies such as Bharti Airtel are expected to follow suit wherein they will tie up with makers of feature phones to offer their services.

Launching the report, Dr. Ajay Kumar, additional secretary in the ministry of electronics and IT (MeitY) said, “25% to 30% of the global economy will be actually determined by the digital economy… The component roadmap is going to continuously enhance the value addition. The phase manufacturing programme initially had focused on mobile manufacturing. Now since component manufacturing is such an important part of it, we need to bring in representation from component manufacturers also. There is a taskforce which drives this phase manufacturing programme. Component manufacturers should be brought into this taskforce so that they can guide and bring their vision. We are working with industry in that regard.”

Kumar emphasized that India is the second largest smartphone market and phones are central to all plans for Digital India, which in turn will further expand the demand for mobile phones.

“All of these value addition leaves us with three major components for which we need to find some answers. These are the difficult ones and constitute significant part of the value: the touch panel, lithium ion battery, and chips,” Kumar added.

Responding to media, Kumar said that Apple Inc. is a big and important brand…discussion is still going on regarding its demands on tax breaks for manufacturing phones in India.

“Battery pack, non-electronic parts, accessories, packaging etc. have high local sourcing possibilities. Medium local sourcing possibilities for display or touchscreen and camera, while main electronic components seem to have low local sourcing capabilities,” the report said.

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