Home / Mobile / PMP, a smart solution to make mobile phones in India, pays off – BusinessLine

PMP, a smart solution to make mobile phones in India, pays off – BusinessLine

A few years ago, import of mobile phones threatened to upset India’s balance of payment situation.

In 2014, India had just two mobile assembly/manufacturing plants — Nokia at Sriperumbudur and Samsung in Noida — and 216 millions handsets were imported.

Today, the situation has reversed. There are 270 mobile assembly/manufacturing units spread across four major clusters — Sriperumbudur, Sri City, NCR and Baddi — producing 290 million handsets (₹1,81,200 crore in value terms) and imports have dropped sharply to just 20 million units of basically high-end smartphones.

Mobile phones’ contribution in overall electronics production in India rose to 37.12 per cent in 2018-19 as against 9.93 per cent in 2014-15.

This transformation in the last five years was mainly due to favourable government policies.

After Nokia’s plant in Sriperumbudur (then the largest in India) was shut on tax-related issues in 2014, experts thought that India had missed the bus in mobile manufacturing.

But they were proved wrong.

The country bounced back to create a mobile revolution with major brands like Samsung, Xiaomi, Vivo, Oppo, OnePlus and Apple, compensating for the loss of Nokia. Today, it is the second largest smartphone handset-manufacturing nation globally, after China.

 

Revival of the industry

“After the Nokia plant shut down, the mobile industry nearly died in India. However, the Phased Manufacturing Programme (PMP) policy by the Ministry of Electronics and Information Technology revived the mobile manufacturing industry in India.

In the last few years, 268 new plants have come up across the country,” said an official of India Cellular and Electronics Association.

Karn Chauhan, Research Analyst, Mobile Devices, Counterpoint Research, attributed this to PMP, under its ‘Make in India’ campaign, in which the government is imposing a customs duty on components in a calibrated fashion to boost local value addition.

The idea behind PMP is to localise manufacturing in a phased manner, depending on the maturity level of the local manufacturing ecosystem.

Samsung was the largest mobile phone manufacturer in 2018 followed by Foxconn and Flex. Together, these manufacturers accounted for 57 per cent of total mobile phone manufactured. While Foxconn manufactured mostly for Xiaomi, Flex did most of the manufacturing for Reliance JioPhone, said Chauhan.

Ajey Mehta, Vice-President and Region Head, Asia Pacific (APAC) & India, HMD Global, which has the licence for Nokia, said: “Each year, the Indian mobile phone market witnesses multiple entries and exits, yet it continues to enthral and grow.”

Global sales

It is estimated that over a billion feature phones will be sold over the next three years globally, and India continues to remain the largest feature phone market.

With the emergence of the 4G-enabled smart-feature category, more Indians have embraced mobility in the remotest areas of the country, he said.

With the existing plants running at full capacity, companies are already looking to expand their production capacities as smartphone users in India will reach 445 million by 2022 from the present 350 million.


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