DIGITAL INDIA to take a hit as chorus grows against Chinese Mobile Brands

New Delhi: As the chorus to shun Chinese goods grows across the country, India, which saw an exponential growth in smartphone manufacturing from just 2 factories a couple of years back to nearly 258 now with billions of dollars investment and lakhs of direct and indirect jobs being created, stands to lose its ‘Digital India’ dream if things get out of control from here on.

The stark truth is: The mobile supply chain has deep roots in China and Indian brands – Micromax, Intex, Lava and Karbonn famously known as MILK — have already been decimated.

The last reported market share for MILK brands in 2019 was: Micromax at 1.1 per cent, Intex at 0.1 per cent, Lava at 1.2 per cent and Karbonn, 0.2 per cent (according to Hong Kong-based Counterpoint Research).

According to Counterpoint Research, Chinese smartphone brands captured 72 per cent of the India market in 2019, compared to 60 per cent a year ago.

Behemoths like the BBK Group (the parent company of OPPO, Vivo, Realme and OnePlus brands) captured 37 per cent market share while Xiaomi (along with Redmi and POCO brands) stood second at 28 per cent.

Led by Xiaomi and BBK Group, the Chinese brands have invested heavily in manufacturing devices and accessories in India.

Xiaomi currently has seven smartphone manufacturing plants in India in partnership with Taiwanese multinational electronics company Foxconn and Singapore-based technological manufacturer Flex Ltd.

More than 99 per cent of smartphones that are sold in India are manufactured locally. Across these seven plants, Xiaomi has employed more than 25,000 people (95 per cent are women).

Xiaomi also locally sources and assembles PCBA (Printed Circuit Board Assembly) in India. It has invested in setting up a smart TV manufacturing plant in partnership with Dixon Technologies in Tirupati, Andhra Pradesh. The company last year infused Rs 3,500 crore into its Indian business unit.

According to Madhav Sheth, Vice President, Realme and CEO, Realme India, they have created over 7,500 direct jobs in their plants and “by the end of 2020, we will increase our workforce to 10,000”.

Vivo has committed Rs 7,500 crore in multiple phases as part of its India expansion plan while Chinese company TCL is investing Rs 2,200 crore in Tirupati for plants that will produce mobile handsets and TV screens.

“We have the maximum capacity of producing 33.5 million handsets in a year and over 10,000 people, including women, are working at our Greater Noida factory,” Nipun Marya, Director-Brand Strategy, Vivo India, had told IANS recently.

According to industry experts, there are three dimensions to the new developments, at a time when the Covid-hit smartphone industry has started seeing good sales once again.

“One is emotional where citizens are feeling bad about the recent developments which has a possibility to impact the sales, albeit temporary,” Faisal Kawoosa, Founder & Chief Analyst, techARC, told IANS.

Second is to adopt a balanced approach to the current situation.

“We have to look at the kind of investments, transfer of technology/skills and building up of a complete ecosystem over the years by the Chinese companies,” he added.

For instance, Chinese brands will be among the first to leverage and make India a export destination for electronics including smartphones with recently announced schemes like the Production Linked Incentive Scheme (PLI) for large-scale electronics manufacturing.

“Third dimension is market realities. It took Chinese brands over three years to reach this level. If we abruptly take them off the chart, then who will fill the void?” said Kawoosa.

There is no doubt that Indian companies need to be stronger in electronics manufacturing but that is a long-haul exercise and can’t happen overnight.

With a three-pronged strategy (restart, restore and resurgence), India can achieve $100 billion in mobile phones and nearly $40 billion in component exports by 2025, according to a new report by industry body, the India Cellular and Electronics Association (ICEA) and consultancy major EY.

Nearly 198 countries import mobile phones, and till recently, only two countries — China and Vietnam — were among the exporters. India joined the ranks as a third with a modest $3 billion exports in 2019-20 and now aims to target the number two spot.

“As the PLI scheme kicks in, we plan to ramp up global exports from India. There isn’t a moment left to waste,” said Pankaj Mohindroo, Chairman, ICEA.

“It is no secret that a substantive part of India’s supply chain has its roots in China. Efforts are underway to enhance self-dependency. Meanwhile, we remain confident that the Indian and Chinese leadership will find a lasting resolution out of the current border impasse,” Mohindroo said in a statement.

From just two mobile phone factories in 2014, India now has become the second largest mobile phone producer in the world, according to the IT Ministry.

The time is not to let the momentum die and instead plan for the future to boost domestic manufacturing, while simultaneously hand-holding Indian brands to help recover and stand up against the fierce competition.

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