ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Study of Few Characteristics

Mobile Phone Manufacturing in India

In financial year 2019, India produced around 29 crore units of mobile phones, which comes to an investment of around `2,780 crore, at 2017 prices. These investment figures turn out to be much lower than those reported in the popular press. Original equipment manufacturers and electronic manufacturing service firms dominate the Indian manufacturing scene. The analysis of the five-digit Annual Survey of Industries data for 2016–17 and 2017–18 makes it apparent that the impetus towards domestic assembly of mobile phones through various policy measures has made a positive impact on the growth of investments, particularly in plant and machinery assets. As a result, the direct employment generated per unit fixed asset has decreased in 2017–18. Value addition for a majority of the firms at the five-digit level was less than 10% in 2017–18.

The growth of telecom services in India has been nothing but spectacular. Given the lower share of manufacturing in India’s gross domestic product (GDP), it is natural that our policymakers are keen on capitalising this growth to develop manufacturing capabilities. The National Policy on Electronics (NPE) 2011 was written with an aim to create a globally competitive electronic system design and manufacturing (ESDM) industry in India, so as to meet the country’s needs as well as serve the international market. The current “Make in India” initiative also intends to use India’s burgeoning demand for mobile phones and create a manufacturing ecosystem for mobile phones in the country. To promote indigenous manufacturing of cellular mobile phone handsets, the central government announced the Phased Manufac­turing Programme (PMP) for mobile phones in the 2015–16 budget. The PMP was notified with the objective of progressively ­increasing the domestic value addition for the establishment of a robust cellular mobile handsets manufacturing ecosystem in India. In addition to the PMP, numerous state governments have come up with incentives for the manufacture of mobiles. The economic literature is clear in that policy measures alone are not enough to create a manufacturing ecosystem. On the contrary, the creation of an ecosystem depends on a variety of factors, some of which are global while others are local. Now that these policies have been in place for a few years, there is a dearth of studies that try
to understand the nature and extent of mobile manufacturing in this country.

There are only media reports, which trumpet every investment done by mobile manufacturers, most of which leave the reader with an impression of India being the next major mobile manufacturing powerhouse. But is this true? The facts on the ground have rarely been placed on record and discussed. This study tries to fill the lacuna by trying to delineate a few characteristics of the ­mobile manufacturing segment in this country. In particular, it focuses on mapping the manufacturing landscape in India by outlining the investments, production and trade of mobile phones and its parts in the country. By providing the estimates of employment generated as well as the value added by the segment, this study also gives some perspective on this issue. The study then focuses on the production and trade scenario for some of the inputs that go into mobile phones. With the help of established databases and a primary survey, our analysis clearly shows that we have a long way to go in mobile manufacturing.

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Updated On : 21st Feb, 2022
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