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"Here's How India Is Becoming A Hub For Smartphone Manufacturing In South Asia"

Discussion in 'World Economy' started by Agent_47, Mar 8, 2017.

  1. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

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    "According to a recently released Government of India report, the mobile industry’s contribution to the country’s GDP currently stands at 6.5% ($140 billion) and is likely to become 8.2% by 2020. Mobile manufacturing units generated 38,300 new jobs in last two years with Taiwanese electronics company Foxconn being the top employer with a workforce of 8,000. As India becomes the fastest growing smartphone market in the world, the Indian handset industry is poised to overtake America as the second largest market in next few years. This growth potential of the mobile sector has resulted in the government taking a slew of measures to ensure manufacturing under its “Make in India” initiative is centered on this lucrative sector.

    India has activated policy changes that liberalized foreign direct investment (FDI) rules in mobile sector and has spelled out the definition of the term “manufacturing” to provide clarity to companies. Total FDI in the telecom sector from April 2014 to March 2016 was around $4.19 billion. Under the revised policy, foreign investment in manufacturing is automatically approved and companies can sell products produced through wholesale and retail routes, including e-commerce, without getting government permission. As per the definition by the Department of Industrial Policy and Promotion (DIPP), “Any change in the physical object resulting in transformation of the object into a distinct article with a different name or bringing a new object into existence with a different chemical composition or integral structure” would qualify as manufacturing. Companies that assemble products in India, such as those in telecom sectors, stand to gain while those that have simply been processing or relabeling products won’t qualify as manufacturers.

    According to Paresh Parekh, a partner at Ernst & Young, “Defining manufacturing for FDI purposes is a milestone development – CKD (complete knock down) and assembling activities stated to benefit the telecom sector.” Along with FDI initiatives, the government has provided more incentives to push local manufacturing of components. In last year’s Union Budget, as part of the phased manufacturing program (PMP) the government had included a provision to manufacture a few accessories, with the subsequent aim of making India a full-scale components manufacturing hub in the next three to four years’ time. Mobile parts manufacturing is critical for a comprehensive Make in India initiative as local manufacturers principally assemble mobile devices in India by importing necessary components. According to Pankaj Mohindroo, president of Indian Cellular Association, “A fine balance has to be created in the phased manufacturing program to enable the final product assembly industry to fully blossom, so that it can attract the components industry vigorously.”

    Currently, more than 90% of the mobile components are imported in India and the segment relies heavily on shipments from China and Taiwan for handsets manufactured in India. To achieve its goal of making India a complete mobile manufacturing hub, the government has changed duty structures around mobile phone components such as the camera module, printed-circuit board (PCB) and keyboards. Through budget 2017 it has also tweaked customs and excise duty structure for the telecom sector. In many of these cases, earlier inputs used to attract higher duties than finished goods, making imports more attractive than the ones manufactured locally. This is expected to bring down manufacturing and compliance costs, and boost India’s competitiveness to export the India-made handsets to global markets.

    Based on these slew of initiatives, in 2015-16 India had generated more than Rs 500 billion (Rs 54,000 crore) worth of locally made phones, and is expected to generate more than Rs 900 billion (Rs 94,000 crore) from 175 million units in fiscal 2016-17. According to the Indian Cellular Association (ICA), “About 40 new mobile handset manufacturing units and 15 component manufacturing units have been set up during the past year.” Uttar Pradesh and Andhra Pradesh together have accounted for half the phone manufacturing units in the country, with a capacity to produce 15 million phones a month.

    Design Initiative in India

    Qualcomm, which is the maker for Snapdragon processor for mobile phones, has recently announced an investment of $8.5 million via a programme titled the Qualcomm Design in India Program (QDIP). This would primarily include funding for its Innovation Labs at Hyderabad and Bangalore. In a bid to expand its design initiative in South Asia the San Diego based maker of mobile phone chips is sharpening its focus on growing the mobile and Internet of Things (IoT) ecosystems in India with R&D and localization support. Through QDIP it expects to enable mobile and IoT vendors at a new Innovation Lab to be set up in Hyderabad. This will be accompanied by an expansion at the current Innovation Lab in Bengaluru to support the initiative. Home Grown Brands

    With an aim to garner a 20% mobile handset market share by 2018, Lava mobiles has aggressive strategy for strengthening its manufacturing capacity in India. It has earmarked an overall investment of more than Rs 25 billion (Rs 2,615 crores) for ramping up the existing manufacturing units. Lava has plans on setting up new manufacturing facilities to increase the overall production capacity to 216 million units per annum in the next five to eight years. Just like Lava, Intex and Micromax also have a strategy in place to expand local manufacturing capacity. Whereas Intex will invest Rs 15 billion (Rs 1,500 crore) to develop a manufacturing facility spread over eight hectares in Greater Noida, Uttar Pradesh. Micromax has already acquired land for an additional factory in Madhya Pradesh; the company plans to invest Rs 5 billion (Rs 500 crore) in the forthcoming months of 2017.

    Foreign Brands

    Chinese smartphone maker Gionee has acquired 50 acres of land for its own manufacturing unit in Faridabad, Haryana. The plant will have a capacity of 30 million units with an investment of Rs 5 billion (Rs 500 crore). The company currently manufacturers about 600,000 phones a month through contract manufacturers Foxconn at Sri City Integrated Business City in Andhra Pradesh. “We are very excited to have begun our India manufacturing. We would be working towards making India manufacturing a hub for not only India, but nearby countries too,” said William Lu, President of Chinese smartphone maker Gionee. Meanwhile the world’s largest contract manufacturer, Foxconn Technology Group has signed agreements with companies other than Gionee, such as Oppo and OnePlus to manufacture smartphones at Sri City Integrated Business City and has an arrangement in place to revive Nokia’s manufacturing plant near Chennai. One of Foxconn’s clients and the numero uno player in the global smartphone market, Apple has also shown a lot of faith in “Make In India” Initiative by announcing plans to set up a mechanized unit in Bengaluru, Karnataka.

    With prominent names such as Apple and Foxconn coming on board, India has enhanced its Make In India brand’s perception. In 2017 due to the slew of incentives stated above it has also developed a reliable mobile parts ecosystem that is required to assemble phones – thereby starting a journey to become a global manufacturing hub for different smartphones companies from around the world."

    https://www.forbes.com/sites/krnkas...one-manufacturing-in-south-asia/#d9ffb115ce2e
     
  2. AbRaj

    AbRaj Captain FULL MEMBER

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    We have assembly lines but still the majority components are manufactured in Japan and China
     

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