According to a report by CRISIL, Indian smartphone market’s imports and dependency on China declined with a surge in domestic manufacturing owing to the government’s phased manufacturing plan (PMP) and production-linked incentive (PLI) schemes.
As per the report, domestic mobile manufacturing will grow by 24-26 per cent in the fiscal year 2022, after registering a 33 per cent compound annual growth rate (CAGR). The growth is attributed to Samsung, Wistron and Hon Hai (Foxconn) meeting the PLI production targets in 2022, despite the ongoing chip shortage.
The momentum is expected to sustain with the domestic manufacturing market growing at 22-26 per cent between fiscals 2022 and 2024, to Rs 4-4.5 trillion in value, led by the PLI scheme.
Further, the report notes that India’s import dependence fell by 33 per cent year-on-year in 2022 owing to a rise in domestic production. Also, dependency on China came down by 4 per cent to 60 per cent in fiscal 2021, and is expected to further decline in the medium term.
However, while imports of finished smartphone units went down, imports of electronic components necessary for mobile manufacturing increased 27 per cent year-on-year.
The report notes that the rise in domestic mobile manufacturing has enabled India to become largely self-sufficient on the consumption front. Local manufacturing was able to absorb the 15-20 per cent rise in mobile consumption in 2022, valued at Rs 2.5 trillion. Major factors driving consumption were fall in lifecycle of mobiles, increased digitalisation and easy financing terms. The momentum is expected to continue with consumption reaching Rs 3.5-4 trillion by fiscal 2024.
However, India continued to have an insignificant impact on global exports of mobile phones even while mobile exports increased 56 per cent year-on-year in 2021 with support from PMP and PLI. The major countries serving the global exports in this segment are China and Vietnam, while the US, Hong Kong and Japan were the leading mobile importers. China served 79 per cent of the US import demand, while India’s contribution was negligible at 0-1 per cent.
