India is set to consume $80 billion worth of mobile phone components over the next five years, a new study revealed on Monday, adding that this will help the country become a global manufacturing hub with advanced local manufacturing. This offers a huge opportunity just from domestic demand perspective to manufacture mobile phones in the country and increasingly source components locally, thus, reducing the dependency on imports, said the study done by IIM Bangalore and market research firm Counterpoint Research. Also Read - Flipkart to acquire Rs 1,500 crore worth stake in Aditya Birla Group's Fashion retailAlso Read - Micromax's comeback 'IN' series launch confirmed for November 3: What you need to know
The contribution of domestically manufactured mobile phones has increased from 14 percent in 2014 to 67 percent in 2016 and is further estimated to reach 96 percent by 2020. However, 67 percent of the handsets manufactured in India contribute to just six percent of the true local value addition with most of the OEMs still importing Semi Knocked Down components (SKDs). “Out of 50 facilities from original equipment manufacturers (OEMs) to original design manufacturers (ODMs) and electronics manufacturing services (EMS) to component suppliers involved in manufacturing of mobile phones in India, almost three-fourth are Indian manufacturers, followed by Taiwanese with 10 per cent and Chinese with 10 percent,” the findings showed.
The components under phase I plan (2016-2018) like battery, chargers, cables, housing, packaging and others can be localized completely, thus driving the true local value addition from current six per cent to 17 per cent in just two years, the study noted. The components under phase II plan (2018-2020) like display, camera and their sub components can further increase value addition from 18 percent to 32 percent by 2020. The phase III plan will include the possibility of localizing the semi-conductor components post 2020 including setting up semi-conductor fab and thus driving the true local value addition beyond 33 percent. “Under the proposed plan, we estimate that more than $15 billion worth components will be sourced locally over the period of five years through 2020 creating over a million direct and indirect jobs in India,” the study said. ALSO READ: Government rolls back 29.44% import duty on mobile phone components