Will the the Indian government's extensively advertised 'Make in India' initiative help realise long pending dream of a made in India phone?
A few years ago when the international brands were dominating the Indian mobile phone market, we then wondered will a fully Made in India smartphone ever be launched, will it make sense or will it be able to survive the competition. With China emerging as the major manufacturing giant, a Made in India phone then seemed highly unlikely. But, the Indian government's extensively advertised 'Make in India' campaign has once again revived hopes for 'Made in India' mobile phones.
Before we elaborate on 'Make in India' initiative, we need to dig deeper on why India couldn't emerge a manufacturing hub for the mobile phone industry, despite home grown handset makers have grabbed a significant share of the market. A lot of Indian brands expanded their base on the basis of bulk imports, mainly from China, allowing them to sell phones at low prices.
A recent Business Standard report cites the Indian Cellular Association (ICA) that about 67 percent of the 245 million devices sold in India in 2013 were imported – about 63 percent or Rs. 36,000 crore in value. The ICA also reports that phone imports rose from 130mn units in 2012 to 165mn units last year. Moreover, domestic production dropped by 30 percent from 180 million units to 125 million during the same period.
Import driven boom
Figures courtesy: Business Standard
If the above given figures are to be believed, the boom in the Indian mobile phone market is largely driven by imports. But, will this trend change? Well, it now seems highly likely.
Changing trends
Companies such as Micromax and Champion have already begun manufacturing phones locally. And a lot of other smartphone manufacturers have shown a keen interest in doing so.
"We are beginning to explore opportunities for manufacturing in India," Manu Jain, operations head for Xiaomi in India, told TOI. "India is a big market and we would like to be close to our customers."
"We are just about to finalise six places in three states" to accommodate the entire ecosystem around handset manufacturing, one of which will house the company's plant as well, Hari Om Rai, Chairman and Managing Director of Lava International, told ET. "The central government is giving 25% subsidy and various state governments are offering VAT-free operations, among others."
Recently, the government invited brands such as Samsung and LG to manufacture phone in India. "We are promoting all the big guns like Samsung and LG to come to India in a big way under 'Make in India' programme. Come to India, establish premises, use human resources, technology and talent of young people to make in India for India and also for exports,” communications and information technology minister Ravi Shankar Prasad is quoted as saying.
“… We've upgraded our manufacturing unit located at Baddi in Himachal Pradesh for manufacturing mobile phones. Currently we have a capacity of 1,00,000 per month. This is expected to double during next financial year. Currently we are rolling our 20,000 units of feature phones only. By end of this financial year we would be manufacturing ‘Made in India’ smartphones,” says Kapil Wadhwa, Director, Champion Computers Pvt. Ltd in an interaction with Digit.
What's the benefit!
The Indian mobile phone market is undergoing a very interesting phase – while international brands are dominating the high end segment, local brands have also strengthened their base especially in the budget segment, and then there's the 'Chinese invasion'. It will be interesting to see how a Made in India mobile phone will fit in.
Well, local manufacturing will help brands save on shipping costs and be independent of currency changes. “…once the ecosystem for manufacturing other components of a mobile phone becomes feasible in India, not only the cost of the product will decrease, but it will also save the country’s foreign exchange and also create employment,” adds Kapil Wadhwa.
For customers, they can expect cheaper smartphones and easier replacement facilities. The government can also have a quicker and more stringent check on the mobile phone quality and standards.
Need for an ecosystem
One of the reasons why the Indian brands took the China route was the lack of an ecosystem, which is conducive for local manufacturing. The 'Make in India' initiative is expected to turn around things. But, achieving a 100 percent localised mobile phone in India doesn't seem to be feasible in the near future.
“ If Make in India has to happen, then the Government of India will have to turn every stone upside down to create a right ecosystem for manufacturing mobile phones in India. Also we will have to accept the fact, that we cannot have a 100 per cent localized mobile phone in India as yet, We have many miles to walk before we can achieve this. But yes, to start with, the Government policies have to be put in place enabling the serious players put up the required infrastructure,” adds Kapil Wadhwa.
If it becomes a reality
We don't think there will be a drastic change in the mobile phone market with a Made in India phone. Though we expect the competition to further grow, and perhaps brands may use 'Made in India' as a USP of the device. But, quality of these devices will have to be at par with the international counterparts. As said above, we need a right ecosystem (that equally focusses on infrastructure, hardware and software) to help achieve make in India mission in this mobile phone segment.
Will you be interested in a Made in India mobile phone? What challenges do you foresee? Let us know your views in the comments section below:
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