India overtook US to become the second largest smartphone market where the leader is China, but the interesting fact is the penetration for India stands as 26% comparted to 60% for China and 79% for US. The market is bound to witness a phenomenal growth and the Smartphone users are expected to reach 780 million by 2021. India’s contribution to the global smartphone market increased from 9 per cent in 2016 to 16 per cent in 2019.
Along with the from retailing, the manufacturing sector has also seen growth under the two major flagship schemes i.e. Make in India and the Merchandise Export Incentive Scheme (MEIS) with an objective target is to produce mobile phones worth US$ 24 billion by 2020 and US$ 190 billion by 2025. Currently, India has around 270 factories making handsets and components. Under the Make in India scheme, the government provided incentives to boost manufacturing of mobile phones and their components in the country. Earlier, mobile phones were not manufactured end-to-end in India and most of the mobile phone manufacturers would assemble smartphones and feature phones in the country. With the introduction of Make in India scheme, the focus shifted from assembling to manufacturing. Local production increased, covering the local demand as well as increasing export from the county. Under Union Budget 2020-21, the government proposed to introduce a policy to encourage the manufacturing of electronics and semiconductors in India. The government announced the creation of US$ 6.38 billion fund, around US$ 5.82 billion out of the total fund would be disbursed to companies based on production-linked incentive (PLI) criteria, while the remaining US$ 567.46 million will be provided under a proposed capital subsidy or reimbursement scheme.
The government announced the creation of US$ 6.38 billion fund to boost electronic manufacturing in the country to ensure that corporates like Apple, Samsung, Huawei, Oppo, and Vivo, in addition to contract manufacturers like Foxconn and Wistron, bring their global supply chains to India and make the country an electronics manufacturing hub in the next five years.
The smartphone export stands at 36 million units in FY20 compared vs 17 million in FY19. In terms of value, the y-o-y growth in exports was 91 per cent with devices exported worth US$ 2.98 billion during FY20.
Xiaomi, the market leader in the country has two facilities – one at the Sri City Special Economic Zone (SEZ) in Andhra Pradesh and the other at Sriperumbudur in Tamil Nadu. Almost all the phones sold by the company in India are manufactured within the country as well as exported to Bangladesh and Nepal.
Samsung is manufacturing mobile phones in its world’s largest mobile phone factory in Noida since 2018, having the capacity to produce 12 crore mobile phones every year, ranging from lower-end smartphones to the flagship Samsung Galaxy S9 series. In January 2020, the company announced an investment of US$ 500 million to set up a manufacturing plant in India to manufacture smartphone displays.
OnePlus invested US$ 141.86 million in a new research and development (R&D) centre in Hyderabad. It also expanded its Noida plant to export its latest models to the US and the European Union markets from India.