Make-in-India: Mobile Phones

If the media reports can be believed, many Indian and globally reputed companies will soon make India a phone manufacturing powerhouse. Announcement from Foxconn that wants to open 10-12 manufacturing facilities in India by 2020, is certainly a great news for electronics sector. However, the telecom ministry must facilitate it.

Here are the specific progress report of Make-in-India in mobile handsets.

1. Dixon Technologies (I) Pvt. Ltd. that makes TVs, set-top boxes, DVD players, washing machines and induction cookers for top multinationals such as LG Electronics, Philips, Panasonic and Toshiba, is now setting up a handset factory in Noida with an initial investment of Rs 25 crore to make 700,000 units a month, and will start manufacturing in August.

2. Karbonn Mobile India Pvt. Ltd. that gets manufactured mobile handsets in China, plans to open an assembly line in Noida, to add another in Bengaluru and and then to start a factory in Hyderabad over the next 12 months.

3. Indian handset brand Celkon has opened its first manufacturing facility in Telangana’s Medchal Industrial Estate.

4. Videocon group would start manufacturing mobile handsets at its Salt Lake facility near Kolkata in a few months’ time.

5. Micromax, India’s second-largest phone maker, has started a plant at Rudrapur in Uttarakhand and is planning investments in Telangana, Rajasthan and Maharashtra.

6. Lava has so far invested Rs 50 crore to build a facility in Noida to assemble one million units a month. A second unit, with an investment of Rs 1,200 crore and a capacity of 10 million units a month, is on the drawing board.

7. Spice Mobility is investing Rs 500 crore in Noida to build a facility it says will be up and running by the next quarter.

And at the top of all, even Mukesh Ambani promises to enter phone manufacturing, if one is to believe his announcement at the launching of Digital India, where he said,”Reliance Industries will make an investment of over Rs. 250,000 crore in the digital space, including rollout of wireless broadband infrastructure and manufacturing of mobile handsets.”

And now even globally reputed companies in the sector are not far behind to make for the huge Indian market in India.

1. Samsung that has been manufacturing in India since 2006, has spent more than Rs 500 crore to add capacity at its plant in Noida.

2. HTC has finalised its `Make in India’ plans. The Taiwanese premium smartphone maker has entered into an agreement with Global Devices Network, which set up a manufacturing and assembling unit three months ago in Noida, to make the handsets on contract.

3. Japanese electronics giant Sony is all set to make in India, though the products will be contract-manufactured at Taiwanese maker Foxconn’s upcoming facilities in the country.

4. Chinese electronics major Lenovo is looking at the possibility of setting up a manufacturing unit for smartphones and tablets in India.

5. Foxconn Technology Group, the world’s biggest contract manufacturer, will begin its second leg of manufacturing in India by producing Xiaomi smartphones in a leased a facility in Sri City in southern part of Andhra Pradesh.

6. South Korean handset maker LG Electronics is looking to start manufacturing of smartphones in India once it gets to a 10% market share, which it estimates could be achieved by December.

7. Foxconn Technology is in talks to manufacture Apple Inc.’s iPhone in India in a move that could lower prices in the world’s No.3 smartphone market

8. Chinese phone maker Gionee plans a full-fledged factory over the next three years. Another Chinese handset maker, OPPO Mobiles will also soon announce plans to make in India.

Foxconn’s announcement is the most interesting development.

Foxconn (the company that’s most famous for manufacturing the iPhone) CEO Terry Gou has bigger plans that may help the sector to grow as global player. He has recently said, “(Foxconn) we will work with local brands and help them with design, and manufacture components locally, so that Indian brands can also start to export, right now India does not export.”

Naturally, most of these facilities, to start with, will be that for assembly operation. With the advantage of much cheaper labour, India will have some advantage. But for making India a significant player in mobile phone manufacturing, if the units for manufacturing components such as processors, cameras and touch screens must get setup soon. And the big manufacturers such as Sony, Samsung or Foxconn will have to allure component manufacturers to establish their plants in the electronics clusters, as Suzuki Maruti helped the growth of auto component sector.

The operation of the cell manufacturing companies will have to be cost competitive and commercially viable. Let us look at that.

“In 2011, KPMG compared India and China’s competitiveness in handset manufacturing. The landed cost of materials, it assumed, would be 10 per cent lower for the Chinese. While an Indian manufacturer would have to import 80 per cent components, the figure for a Chinese company would be only five per cent. Chinese labour, according to KPMG, was 1.8 times more productive. Power costs were 20 to 30 per cent lower while water was 30 to 35 per cent cheaper in China. These ensured that a mid-sized Chinese manufacturer with a capacity to make 20 million units a year would have a profit margin of nine per cent. For the Indian company, the figure would be 2.6 per cent.”

India will have to improve its labour productivity. The cost of finance, power and water must come down and be lower than other competing Asian countries such Vietnam. It must not be difficult. For record, Vietnam produced mobiles worth over Rs 2.5 lakh crore in 2014/15, that is 12 times more than what India produced. China makes phones worth 60 times more.

With only 68% of Indian rural households owning cell phones that too only the cheaper one and the urban Indians aspiring to promote to smart phones, the potential market in India is huge.

As Ravi Shankar Prasad wishes , “India will emerge as a parallel production hub to China for global markets in electronics manufacturing as the government shifts attention to boost the making of sophisticated, high-technology products in the country.”

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One Response to Make-in-India: Mobile Phones

  1. hcparekh says:

    Ease of Doing Business ?

    Here is one of the things that I think is needed :

    Treat MII ( Make In India ) on par with MOM ( Mars Orbital Mission )

    We have all seen MOM control room on TV , with dozens of scientists glued to respective computer screens , monitoring every aspect of the Mission

    And , whenever required , taking ” Course Correction Actions ” in real time

    For MII ( Make In India ) too , we need such Control Rooms

    One at the HUB (in DIPP ) and 20+ SPOKES (one each in State Capitals )

    The concerned officers will monitor :

    > WEB SITE TRAFFIC

    Who is visiting from where and looking at which pages , and doing what , and for how long …etc

    > MESSAGE TRAFFIC

    From server log of B2B web site , monitor which FOREIGN COMPANIES are blasting ( We are interested in a JV with you / We want to buy from you ) messages to which INDIAN COMPANIES

    > ACTION TRAFFIC

    B2B server sending out ( within ONE MINUTE ) , full details of above-mentioned messages to,

    * Indian Diplomatic Missions abroad to get in touch with the Message-Sending FOREIGN COMPANIES , offering instant help

    * Chief Ministers / Industry Ministers / Industry Commissioners etc of the STATE GOVERNMENTS , where message-receiving INDIAN COMPANIES are located ( expect a fierce ,healthy competition amongst States to locate project in their States ! )

    > PROJECT MONITORING

    Implementation of each project ( above a certain value ) being monitored using PERT technique – thru a specific Mobile App installed on the cell phones of concerned Government officers

    To make MOM a reality , cost the country , some Rs 430 Crores – and time of some 100 scientists

    I believe CONTROL ROOMS ( War Rooms ? ) of Make In India , may not cost more than Rs 43 Crores ( – all put together )

    And some company like Infosys / TCS / Wipro , will be able to construct – and operationalize – such rooms ( hardware and software included ) within 3 months

    Given the challenge to raise our ” Ease of Doing Business ” rank from 142 to 42 , this is the surest / fastest / cheapest method !

    —————————————————————————-

    hemen parekh
    14 July 2015
    B2BmessageBlaster

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