According to the Indian Cellular Association, production of mobile handsets in the country has witnessed a significant decline from 180 million units in 2012 to 125 million in 2013. Further, overall imports have also declined from 110 million units in 2012 to 45 million in 2013.
The organisation states that a number of companies have either cut down on production or have shifted manufacturing partially to other countries such as Vietnam and Taiwan. Moreover, with tax notices imposed on it, Nokia has shifted a significant part of its manufacturing outside India. Nokia?s largest manufacturing plant is near Chennai, employing about 30,000 people. However, the plant?s future is uncertain with the company involved in a tax dispute worth Rs 30 billion.
As per the association, the government has not been able to keep up with its promise of encouraging domestic manufacturing of mobile phones in the country. Over the years, the government has failed to make required policy changes to support Indian mobile handset manufacturers. For instance, export benefits have been provided only for mobile phones with keypads even when the market has clearly shifted to touch-screen phones. In fact, the export value of mobile phones has declined from Rs 130 billion in 2012 to Rs 70 billion in 2013 and expected to further come down to Rs 30 billion in 2014.
To encourage investments in the Indian mobile phone market, the Indian Cellular Association has advocated the introduction of a more supportive tax regime which encourage component manufacturer to increase investment in the market. In absence of locally-manufactured components, mobile phone manufacturers have to import a large number of components, thereby increasing the price of the handset.
