According to a joint study by Counterpoint Research (
www.counterpointresearch.com) and the Indian Institute of Management in Bangalore (
www.iimb.ernet.in), the growth of the smartphone market in India will lead to technology groups investing in new facilities.
The study says: “India currently contributes only about 6% of the value of phones sold in the country through local manufacturing or assembly, but its contribution could rise to more than 30% in the next five years. The Indian government should use the surging domestic demand to attract manufacturers that will make higher-value components, such as batteries, cameras and semiconductors.”
According to the study, “India overtook the USA this year to become the world’s second-largest smartphone market — by number of users” and is projected to generate a billion smartphone sales by 2020.
“Yet the value added through local manufacturing is paltry compared with other countries like China and South Korea, where around 70% of the work is done domestically.
“Prime Minister Narendra Modi, who has made the Make in India programme a centrepiece of his economic policy, should want more of those jobs, if his country is providing such a lucrative market.”
Before the launch of Make in India, the country had only two smartphone assembly facilities; there are now about 50. They assemble smartphones for the world’s leading brands, including Samsung and Huawei Technologies Co.
Amitabh Kant, chief executive officer of the government ‘think tank’ Niti Aayog, said: “India has a chance to move into the world’s top-three mobile-phone manufacturing hubs. More localisation and investment in R&D, encouraged by good government policies, will significantly boost the Indian economy and our global brand equity.”
Apple Inc, Samsung Electronics Co and Xiaomi Corp have been looking to expand in India, as growth in the USA, China and other markets slows down. Apple CEO Tim Cook made his first trip to India in May, and his company has been lobbying for the right to set up its own retail stores. Under current rules, this means it must procure 30% of its components in India.
The study says that the smartphones sold in India over the next five years will require components worth more than $80 billion.
“If the country can move up the value chain from simple assembly to more-complex manufacturing, it could increase the domestic contribution to the value of phones to 32% by 2020”, the researchers said.