According to the government, India’s mobile phone production by value more than doubled in FY22, making the country the world’s second-largest manufacturer of these devices.
India produced mobile phones worth Rs 5,277 crore in FY22, up from Rs 2,334 crore in FY21, according to the government, which attributed the increase to its production-linked incentive scheme.
“Due to the Production Linked Incentive (PLI) Scheme, India is currently one of the fastest-growing mobile phone manufacturers in the world and has emerged as the second-largest manufacturer of mobile handsets in the world in volume terms,” Rajeev Chandrasekhar, minister of state for electronics and information technology, said in a reply to Parliament.
Production Linked Incentive PLI scheme
For a period of five years, the PLI scheme offers eligible companies incentives ranging from 4 to 6 percent on net incremental sales of mobile phones and electronic components manufactured in India over the base year. The government has approved benefits for 16 companies, including 10 mobile phone manufacturers and six electronic component manufacturers.
According to Amitabh Kant, the then-CEO of NITI Aayog, India will produce 300 million mobile phones in 2020-21, up from 60 million in 2014-15. During the same time period, the country’s mobile phone manufacturing units increased from two to 200.
According to a recent Deloitte report, demand for smartphones in India is expected to reach 400 million in 2026, up from 300 million in 2021, at a compound annual growth rate of 6%.
5G contribution
“This high demand is likely to be primarily created after the launch of 5G, which will alone contribute 80 percent of the devices (about 310 million units) by 2026,” the advisory firm said.
As domestic production rose, India’s mobile phone imports reduced 33 percent in FY22, said CRISIL, citing data compiled from the Directorate General of Foreign Trade.
The increased production of mobile phones resulted in an increase in the import of components used to make them. In FY21, the country imported $6.48 billion in telecom devices from China, up from $5.6 billion in FY20.
India is now largely self-sufficient in meeting domestic demand, which has been rising over time.
According to data, the increase in domestic production was primarily to meet domestic demand, as India’s mobile phone exports, despite increasing 56 percent in the previous fiscal year, remained insignificant globally.
The dominance of low-budget phones among phones manufactured in India has been cited as a factor for the country’s low share in exports to major mobile phone markets.
“India’s exports largely comprise low-end mobile phones, priced below Rs 10,000. But major markets such as the US, Hong Kong and Japan import mobile phones priced upwards of Rs 15,000 because of their high per capita income,” CRISIL said in its report.
However, exports are expected to increase as major handset makers such as Samsung and Apple ramp up manufacturing in India.
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