According to a report by CRISIL, mobile phone production in India is expected at grow at 22-26 per cent from fiscal 2022 – 2024 to reach Rs 4-4.5 trillion (by value) as the country’s dependence on imports continues to decline. CRISIL firther noted that after logging a 33 per cent compound annual growth rate (CAGR) between the fiscals 2016 and 2021, domestic mobile production is estimated to have grown 24-26 per cent in fiscal 2022.
The study further noted that India’s mobile phone exports have decreased approximately 33 per cent in fiscal 2022, and dependency on China also declined significantly. In contrast, during the same period, the country’s exports surged 56 per cent, which is expected to grow further to touch Rs 1.0-1.2 trillion over fiscal 2023 and 2024.
With domestic output rising, CRISIL report asserts that India has become largely self-sufficient on the consumption front. In fiscal 2022, the country saw a 15-20 per cent increase in mobile consumption to approximately Rs 2.5 trillion. CRISIL expects the momentum to continue this fiscal and in fiscal 2024, boosting consumption to Rs 3.5-4.0 trillion by fiscal 2024.
In addition, the report added that the production of mobile phones in India has giant leap after the Production Linked Incentive (PLI) scheme and Phased Manufacturing Program (PMP), while helping the country reduce its import dependency on foreign countries. Moreover, the Rs 410 billion handset PLI scheme entails incentives in the form of cash payouts based on investment and targeted increments in production. The scheme offers graded incentives in the form of cashback at 6 per cent of incremental sales of goods for the first two years each, 5 per cent for the third and fourth years and 4 per cent for the fifth year.
However, the report by CRISIL mentions that with rising production, imports of electronic components essential for mobile assembling/manufacturing also increased 27 per cent year-on-year. CRISIL said during fiscals 2017-2022, the smartphone sales in India rose from approximately 113 million to 159-161 million, while shipments of feature phones fell to 88-90 million from approximately 140 million during the period. CRISIL attributed this fall to a three-fold increase in 4G subscribers.
CRISIL also noted that the share of 5G smartphones in overall handset sales, which was low at 15-20 per cent in fiscal 2022, is expected to pick up substantially only by late fiscal 2023 due to affordability issues. Meanwhile, the amartphone market trackers have projected that India’s smartphone market may grow 5-10 per cent annually in 2022, while the entry-level segment is expected to decline sharply as users upgrade to higher segments.
