After COVID-19 crisis, India can take pole position in mobile phone manufacturing
Since the ‘Make in India’ campaign by Government of India kicked off in 2014, the mobile phone OEMs have been the frontrunners in capitalising this opportunity. Today, we have successfully emerged as the second-largest mobile phone manufacturer in the world after China, contributing 11 per cent globally.
Interestingly, the Noida-Greater Noida belt in UP has fast become the center for mobile phone manufacturing. More than 80 OEMs have employed and upskilled thousands to produce handsets, components and accessories. Although the GST rates on mobile phones have been increased to 18 per cent, as a welcome measure, the Centre has approved a Rs 41,000-crore stimulus and incentives of 4-6 per cent to boost local manufacturing of mobiles and components.
The steam that the manufacturing sector had picked up over the last few years has also been derailed temporarily by the COVID-19 pandemic. Abiding by government directives and keeping workforce welfare as the key priority, productions across the nation have been suspended for now. Understandably, while this does put a dampener on ambitious ‘Make in India’ plans, every cloud has a silver lining. Once the COVID-19 crisis subsides and is tackled with, we need to put all hands on deck, backed by a strong vision and game plan to harness our in-house manufacturing capabilities.
Provision for cluster manufacturing: As India becomes a service-centric economy and aims to gain an edge over other manufacturing hubs such as China, Vietnam, Indonesia, paving the way for cluster manufacturing holds many benefits. With higher concentration of products, services and industry players in one geographic area, manufacturers will be able to leverage an upskilled and highly specialised talent pool, implement feedback from customers and partners to re-orient production processes rapidly as well as deploy innovation quickly with more productivity.
Promote localisation of mobile device components: India lacks world-class component makers and factors such as 10 per cent duty on printed circuit boards (PCBs) is making it harder for them to set up local manufacturing. It is imperative to encourage domestic manufacturing of entire ecosystem of components such as circuit boards, sensors, camera modules at rationalised duty structures and incentives as this will boost Make in India competitiveness further.
Upskill labour with new-age technologies: As we enter the 5G era, traditional manufacturing will give way to flexible, automated production lines with use of drones, automated guided vehicles etc. Further down the line, manufacturers will adopt Industry 4.0 ready technologies such as IIOT, cloud computing and artificial intelligence. There is a need for an industry ecosystem and academia partnership to create curated training modules and enable the workforce to manage and operate automated production processes.
Mobile manufacturing in India has the potential to become a $230 billion export-centric industry by 2025 and create more than 4.7 million jobs, according to ICEA. With a huge labour force at our disposal, India will not only increase output and production but also increase exports manifold, contribute to the GDP and add to the $5 trillion economy vision. Better and transparent trade policies can help the country leverage its geographical position to play a critical role in the global supply chain of the mobile industry. Its potential as a high consumption market could keep demand fluctuations in check and save up on the logistics costs. And with a highly-skilled, quality workforce and improved supply chain, robust infrastructure can position India as the prime mobile manufacturing hub globally.
The temporary setbacks that we are currently seeing, as the nation grapples to stymie a deadly virus outbreak, can be behind us as India Inc will need to come together to speed up the momentum on manufacturing, production, even supply chain distribution and meeting consumer demands across every corner of India