India may just have taken the first steps toward reducing its dependency on international markets for smartphones. The country has seen a reduction in the import of smartphones from China. This is due to the increase in companies opting to manufacture more devices locally. Through the Phased Manufacturing Programme (PMP) and the Production Linked Incentive (PLI) schemes introduced by the government, India has been able to shift its requirement of bringing in devices from China. Through the new initiatives, the government provides an incentive of 3-5% to companies who achieve a set production target.
According to a report published by CRISIL, one of the leading credit rating agencies in the country, India has seen a visible benefit in manufacturing devices locally. It states there has been almost a 33% YoY decrease in mobile imports during the fiscal year 2022. The imports have majorly decreased from China and Vietnam by almost 37% and 21% respectively.
The study also shows that the country has seen a 24-26% growth in 2022 so far in smartphone production. This is in comparison to a compounded growth rate of 33% between 2016 and 2021. This has been achieved despite the ongoing chip shortage. CRISIL’s study also does mention that three major players have achieved their PLI targets for the fiscal year 2022.
India has also seen an immense rise in the export of budget smartphones to international markets as well. Devices priced under Rs 10,000 have been in demand in many countries like the Netherlands which has a YoY growth of 108%. Major markets like the US, Hong Kong and Japan have been keener on smartphones priced under Rs 15,000.
The growth will continue in the coming years as Apple and Samsung, two major players in the market, are expected to expand their businesses in India. Apple is reportedly already working on plans to start the production of more devices in the country.
The report forecasts that there will be a gradual decline in the sale of feature phones and a rise in 4G smartphone sales. While there has been a growing interest in 5G smartphones, users are expected to get more compatible devices in the following months. The rollout of 5G services and festive sale offers will further boost sales.
One step at a time
While there has been a decline in importing smartphones from the international markets, there has been an increased dependency on components. Internal hardware and components for many devices from Korea and Netherlands have increased by 186% and 512% respectively.
While it’s an early stage, there is scope for many more industries to produce more of these components locally. It may not be immediately executed, but as major companies decide to expand or diversify their production units in India, we could expect more relief.
This will require a large amount of investment from companies, but it could be possible one step at a time. Companies could work together to set up entire production facilities to meet the production and sales of one country or region.
