Make in India: Mobile phone manufacturing industry muscles up, eyes global leadership

mobile phone manufacturing
India's mobile phone manufacturing sector is now exporting innovation, with ambitious plans to challenge China and reshape the global tech landscape.

Mobile phone manufacturing in India: India’s mobile device exports reached $10.5 billion during the first nine months of the financial year 2023-24, surpassing the projections for the entire year. The Indian Cellular and Electronics Association predicts that the final export figure for the entire year will touch $14.5 billion, compared with $11.1 billion in the previous fiscal year. In the nine months of the current financial year, India’s mobile exports to the US, Europe, parts of Asia, and West Asia increased by 42% compared with the same period last year which saw exports of $7.3 billion.

December marked a notable achievement, with mobile exports peaking at $1.38 billion. This year is the first to witness mobile exports exceeding $1 billion in six out of nine months since April, compared with just twice in FY23.

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India has emerged as the world’s second-largest manufacturing hub for mobile phones, thanks to substantial investments from original equipment manufacturers (OEMs), original design manufacturers, and component companies. The industry now directly employs around 250,000 people, significantly boosting employment opportunities.

While the headline numbers of rising mobile phone exports are impressive, their impact extends far beyond the financial figures. This burgeoning industry is fuelling a skills revolution in India, creating a pool of highly trained engineers, technicians, and production specialists. As manufacturing expands, so too does the need for robust logistics and supply chain infrastructure, leading to the development of specialised ports, warehouses, and transportation networks. These advancements are not only fostering local talent and expertise but also laying the groundwork for a diversified and resilient industrial sector.

Expansion of mobile phone manufacturing in India

Over the past decade, mobile phone manufacturing in India has experienced considerable growth. This increase in exports is largely attributed to companies like Apple and Samsung which have expanded their export shipments and domestic production to leverage the government’s production-linked incentive (PLI) scheme. Introduced to boost domestic production, the PLI scheme has unexpectedly become a flagship success of the government’s Make in India initiative.

Since the scheme’s introduction, exports of smartphones have surged by 139% over four years. Before the PLI scheme, only about 1% of Indian mobile manufacturing output was exported. Today, an impressive 99.2% of mobiles used in India are locally made.

As production escalated, India also increased its exports. Under the PLI scheme, the government allocated Rs 1.97 lakh crore for manufacturers to produce handsets in India. The scheme’s introduction set an ambitious goal of exporting 1 billion handsets monthly, a target that has now been consistently met.

The PLI scheme attracted Apple’s vendors—Foxconn, Pegatron, and Wistron—to India, along with Samsung and Bharat FIH (another Foxconn firm). The Tatas have recently taken over the Indian operations of Apple’s vendors. FY24 marks the third year of the PLI scheme for most of these firms.

Among major manufacturers, Apple claims a significant export share, contributing nearly $7 billion. Nearly half of the handsets exported from India in FY23 were iPhones. iPhone exports are expected to grow to between 65 and 70% by the end of FY24. Foxconn led iPhone exports, with outbound shipments growing by nearly 250% in the first nine months of FY24 compared with last year. Pegatron’s exports also saw remarkable growth, increasing by over 100% from the previous year.

Apple seeks to manufacture more than 50 million iPhones annually in India within the next two to three years, reducing its dependence on China. Subsequent plans include manufacturing tens of millions more units.

Amid these developments, India is engaged in trade talks with the US. The recent mobile phone export data coincides with US Trade Representative Katherine Tai’s visit to India for the Trade Policy Dialogue, focusing on exports and supply chain resilience, with mobile phones being a key component.

With the government’s success in mobile phones, there is confidence that the entire electronics value chain, including PCs, servers, and laptops, will soon be manufactured in India. The next step involves reducing reliance on imported components and technology. Analysts emphasise the need for substantial investment in research and development to close the technology gap and develop indigenous intellectual property.

India’s remarkable success in mobile phone manufacturing should not overshadow the crucial challenge of reducing dependence on imported components and technology. To truly claim a leading position in this global industry, the nation must invest heavily in research and development. This involves nurturing homegrown innovation, fostering collaborations between academia and industry, and attracting top talent to develop cutting-edge technologies. By building a robust indigenous ecosystem, India can not only secure its supply chain but also emerge as a global exporter of innovation, paving the way for a future where ‘Made in India’ signifies not just assembly but cutting-edge design and development.