The Indian mobile phone market is one of the most lucrative ones right now alongside that of China and the US. With growth in the segment mostly stagnating in the US and Western Europe, and cut-throat competition in China from startups and white-box manufacturers reducing pricing power and stifling operating margins, established device manufacturers and newer startups alike have been looking for greener pastures. To the OEMs, markets like India, Vietnam, Brazil, Russia, Turkey, Indonesia etc. represent an opportunity to grow their brands without compromising as much on profit margins. But none of those markets have either the scope or the pull of the huge Indian market. It is an enormous, albeit complicated market to navigate but OEMs like Xiaomi and Lenovo are already tasting massive success having seen more sales from India over the past several months than in any other market the companies operate in, apart from China.
A new study, jointly conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst and Young (EY) forecasts that the mobile device market in India is poised to cross 300 million by the end of this year. The report is titled “Speeding Ahead on the Telecom and Digital Economy Highway”, and says that in spite of surging sales, only 46 million of the devices are actually expected to be manufactured locally in the country, with the rest being imported from outside, mostly from China and Taiwan. The report also attempts to take a look at what ails the mobile manufacturing sector in India, and recommends incentive schemes and a stable regulatory environment to lure manufacturers to set up new manufacturing units in the country, on the lines of India’s much smaller neighbor Vietnam, which only opened up to capitalism a few years back, but has since, emerged as a global hub for manufacturing of mobile handsets because of the pro-active measures undertaken by its government. The report categorically pointed out, that reducing the dependence on imports will not only save foreign exchange thereby reducing India’s large Current Account Deficit, but also create jobs locally, thereby adding further to the already burgeoning GDP (Gross Domestic Product) of the nation.
It remains to be seen whether red-tape and bureaucracy will allow the Government of India to independently verify and research some of the pointers in the FICCI-EY report, and if India can indeed be a global manufacturing hub for smartphones the way China and Taiwan have been, for the last few decades. A few companies though, have already started manufacturing mobile phones in India, including local vendors like Micromax. We have also heard how many major vendors like Samsung, Sony and Motorola have been planning to start manufacturing operations in the 3rd largest mobile phone market in the world. China’s largest OEM Xiaomi has also expressed interest in starting their manufacturing operations in India. All that does point towards more handsets being made in India over the next few years, although, it is highly unlikely that India is going to challenge China’s unequivocal supremacy as a global manufacturing hub for just about every possible item under the sun any time soon.