Smartphone Manufacturing - Why India Must Create Supplier Ecosystem - Part 2

By Zia Askari | TelecomDrive.com

As India plans to create a unique value proposition for global as well as local brands to manufacture smartphones and mobile phones – the government must create encouraging atmosphere to attract supplier ecosystem that will make local mobile and smartphone manufacturing a truly international experience.

Speaking on India’s potential for becoming a preferred destination for smartphone manufacturing, Rajesh Agarwal, Co-founder, Micromax Informatics says that Micromax has always been committed to foster the manufacturing ecosystem in the country.

“Currently we import devices from China, where we have tie-ups with manufacturers such as Foxconn but last year we announced that we will start assembling phones locally by the first quarter of 2015 in our plant in Rudrapur. We have already started assembling phones on trial basis in the Rudrapur plant. The facility employs over 400 people. With this initiative, we have reiterated localization as the key for the industry’s growth in India. We recognize and understand the needs of the consumers and give due ordnance to it,” he explains.

Arvind Vohra, Country CEO and MD, Gionee India says that currently all key components of smartphones are imported and with more and more international brands manufacturing in India, the ecosystem development will be the key for further development of local manufacturing in India.

“Gionee has tied up with the consultancy firm Ernst & Young to advise on potential locations across the country. Our manufacturing plan will be spanned out in phases which will begin from assembling moving up to complete manufacturing very soon,” he explains.

As per the views of Kapil Wadhwa, Director, Champion Computers this is the right time to invest in the manufacturing sector as the government is already giving a lot of support for this sector. And hence, moving forward there will be more activity on the manufacturing of Mobile Phones in India.

“Simply put, it will be difficult for imported products to compete with locally manufactured products , so they have to seriously look at manufacturing Mobile Phones and other Products in India and this has already started to happen with a lot of international brands announcing their plans for manufacturing in India.” He explains.

“We are a 100 per cent Indian manufacturing oriented organization. we have two manufacturing units in India – one based in Baddi, Himachal Pradesh and the other one based in New Delhi. We are already making a lot of difference by producing locally made Mobile Phones and Tablet PC for the Indian consumers. I think the biggest advantage comes from the fact that you have a manufacturing facility close to your end customers and hence it becomes easier to attune the products for local needs and requirements.” Kapil adds on.

The Right Ingredients?

As per the views of Arvind Vohra, Country CEO and MD, Gionee India, right location to suit the needs is the first step for beginning the manufacturing process in India. “Post the finalization the requirement and step by step plan how the manufacturing will phase out needs to be drawn. Government’s support on regulation that help ease of business and component manufacturers support on timely delivery will be a key factor,” he explains.

Speaking about the lack of smartphone supplier ecosystem in India Kapil Wadhwa from Champion says that this is a big challenge today. “Even though we have a government which is going all out to support local manufacturing in India, creating and enabling the manufacturing ecosystem of right suppliers – takes some time and as of now we do not have that in India. I think we are moving in the right direction and in time, we will also have the right manufacturing ecosystem in place for Mobile Phones and Tablets,” he adds on.

Amidst the ongoing Indian government Make in India initiative, there are a lot of international brands which are now seriously looking at starting their manufacturing base in India and OPPO, the smartphone brand from China is one of them.

According to Sky Li, Vice President, OPPO, “India is the top priority in our expansion plans in South Asia this year. We have received tremendous support and appreciation from the customers and it is now time to reciprocate the feeling. The Smartphone boom in India indicates the time is just right to focus on expansion plans and increasing volume in India to a comparable level with the China market in the next five years.”

“2015 will be a year of expansion for us. We are already among the “top three” players in Indonesia, with more than 11 percent market share. Similarly we have 13 percent in Vietnam and almost 11 percent in Malaysia. Globally, we plan to sell more that 15 million units this year”, he further added.

OPPO entered the Indian market in January 2014 and is aiming for rapid growth and expansion across target markets in India. OPPO will focus on setting up a state of the art facility to manufacture world class smartphones for the Indian audience as well as key markets overseas.

Challenges to Opportunities

As being put by Arvind Vohra from Gionee, “We will not take it as a challenge but as an opportunity to participate in Make in India drive. Having said that we are already in talks with consultancy firm for logistics and analytics of the process, to start with we might go for a contract manufacturing in order to kick start the mobile production in the country. The current government is supporting the cause and we don’t really see any particular challenge at this stage,” he adds on.

According to Rajesh Agarwal from Micromax, as the industry hasn’t been set up, the initial phase will require a lot of settling in processes for both the manufacturers, the government and the service industry involved.

“Lack of feasibility as well as availability of required resources might hinder the manufacturing process in India. While increase in cost for production might prove as an unwelcome change, we think as long as our profits and consumer’s needs don’t get affected there won’t be any major challenges,” he adds on.

Champion has taken this challenge for lack of supplier ecosystem and already started creating an opportunity out of it. The company is positioning itself as a single source OEM destination for Indian companies looking for kick-starting their mobile manufacturing in India.

“As mentioned, this is a big challenge. However, I would like to mention that we have also taken this gap as a big opportunity and now we are offering our OEM (SKD) product services for Indians who want to kick-start their Mobile phone / Tablet manufacturing dream in India. So if someone is interested in creating a unique smartphone in India – we can help them do that right here, at the OEM level - from our manufacturing facilities,” Kapil Wadhwa from Champion adds on.

“We are moving in the right direction and adding more value to our offerings for our customers today. There is no doubt that smartphone has emerged as a big demand generator in India market, but I strongly feel that there will always be big market for feature phones in India and we will continue to play an important part in that market. As of now we have close to 20 per cent of our focus towards Smart Phones and tablets, moving forward this might increase. But we will continue to be a force in the feature phone segment of the country,” Kapil Wadhwa from Champion explains.

The Road Ahead

While the ongoing emphasis on ‘Make in India’ is surely a big positive move towards encouraging local manufacturing, it can only become a deep rooted reality when India creates sufficient base for local availability of mobile phone suppliers.