India is today the second largest smartphone market in the world in terms of number of users, connecting more than 292 million people across the country. India is projected to be the single biggest market for global smartphone sales in the next few years.
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 INR 31,000 crore in value generated through local sourcing and assembly, according to a report titled ‘Indian Mobile Phone market: Emerging Opportunities for fulfilling India’s Digital Economy Dream’, published jointly by the Internet and Mobile Association of India [IAMAI] & Enixta Innovations, today. The huge potential for improvement in local value addition further highlights enticing opportunities for entrepreneurs in realising the digital India dream, while providing a fresh impetus to the country’s ‘Make in India’ program for mobile phones manufacturing, thereby reducing our dependence on tech imports.
According to the report, there is a high possibility to build local 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.
Speaking at the launch of the report, Dr. Ajay Kumar, Additional Secretary, MeitY exuded confidence that in the next 5 to 10 years, 25% or 30% of the global economy will be actually determined by the digital economy. He said that the Internet economy is the biggest opportunity in India and has the potential to be bigger than the ITeS industry, going forward.”
The report which has studied the smartphone market in India from the perspective of consumer’s needs and application depicts a huge potential for increasing the local value addition in the domestic manufacturing industry. It thus offers a concrete roadmap to realise the grand vision of a “One Trillion Dollar Digital economy”.
According to the report, the demand for the mobile phones in India is largely met through imports. As for domestic manufacturing, the overall localisation rate in 2016 stood at 6.1%, 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.
Some of the key findings of the report are:
– 38 new mobile manufacturing units have been set-up 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
– The states of Uttar Pradesh, Andhra Pradesh & Telangana have 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 ₹135,000 crore as compared to ₹94,000 in FY 2016-17
– For smartphones, the market size of domestic manufacturing in FY 2019-20 will be ₹120,200 crore
– 2 out of every 3 mobile phone sold in India in 2016 were domestically produced. It is estimated by 2020; almost 96% of the mobile phones to be sold in India will be locally manufactured
– In 2016, the local value addition for smartphones stood at 6.1%, largely limited to assembling and packaging of SKD (semi knocked down) units
– Local manufacturing value addition of more than 25% can be achieved for smartphones by 2019, translating into ₹31,000 crore of local component sourcing and local assembly
– Battery pack, non-electronic parts, accessories, packaging etc. have high local sourcing possibilities. Medium local sourcing possibilities for display/ touchscreen and camera, while main electronic components seems to have low local sourcing capabilities
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