India Should Focus on Export-Oriented Mobile Manufacturing: Report

The Indian mobile manufacturing industry should focus on manufacturing with an export-oriented approach as the domestic demand has started to decline, a report said here on Thursday.

The ICEA-McKinsey Report 2018 also noted that the Phased Manufacturing Programme (PMP) intended to turn India into a manufacturing hub is not enough to help the country to become an export manufacturing hub.

"The strong growth seen between 2014 and 2017 is starting to slow down," the joint report said.

If the Indian industry restricts itself to making mobile handsets and components only for India, as per the survey the country is likely to manufacture "only 450 million handsets and employ 18 lakh people for an industry worth around $80 billion (roughly Rs. 5.8 lakh crores) by 2025".

"If India extends its ambition beyond making in India for India, to making mobile handsets and components in India for the world, it could manufacture around 1,250 million handsets across various segments by 2025, firing up an industry worth around $230 billion (roughly Rs. 16.7 lakh crores)," it said.

The report observed that the export-oriented approach would create around 47 lakh jobs in the process.

Commenting on the government's Phased Manufacturing Programme, the report said that although PMP has aided the growth in the mobile manufacturing sector, it has failed in taking an export-oriented approach and in creation of a component and sub-assembly ecosystem.

"PMP is effective but does not go far enough to establish India as a global manufacturing hub," it said.

The PMP was started in 2015 by making local mobile phone manufacturing cheaper by imposing duties on imports.

"In value terms, the 2017 estimated exports of around $0.1 billion are short of the target for 2019 of $9 billion. Despite some improvement in exports since 2015, India still has a long way to go to become an export hub," said the report.

It also recommended export incentives, labour reforms, and duty differential through PMP among others to increase exports.

"Developing a robust export promotion strategy through increasing incentives under Merchandise Exports from India Scheme (MEIS) and duty drawback rates available for mobile handsets."

Commenting on the findings of the report, Pankaj Mohindroo, Chairman, India Cellular And Electronics Association (ICEA) said: "...green shoots have already started appearing in the mobile manufacturing landscape of the nation and this needs to be further accelerated with a major focus on exports."