India's smartphone exports have set a new benchmark, surging past the $2 billion mark in October - the highest monthly total ever recorded. This milestone, according to estimates from the Indian Cellular and Electronics Association (ICEA), an industry body representing both global and domestic mobile device manufacturers, underscores the country's growing prominence in global mobile supply chains.
Smartphones have been a key success story of the government's production-linked incentive scheme, helping India become the second-largest mobile phone manufacturing country, after China.
India is far behind global competitors such as Vietnam, Taiwan, and Mexico in increasing electronics exports to the US by making the most of Washington's tariff action against China. In 2018, the US imposed a 25 per cent punitive duty on a range of Chinese electronics items. The trade duties led to a sharp fall in Chinese electronics exports to the US from $207 billion in 2018 to $140.2 billion in 2019, down 32 per cent, according to Indian Cellular and Electronics Association (ICEA) data, which has been analysed by ITC Trade Map.
Exports of electronics goods has risen by 24 per cent from April to November as compared with the same period in the last fiscal, the largest increase out of India's top 10 export categories. The increase has been propelled by mobile exports under the Production Linked Incentive (PLI) scheme and has pushed electronics up from sixth to fifth position in the top 10. A gap of $200 million separates electronics from occupying the fourth position, currently held by drugs and pharmaceuticals at $17.9 billion.
A day ahead of the interim Budget, India slashed import duty on spare parts, like battery cover, lens and SIM socket, used in mobile phone manufacturing to 10 per cent, from 15 per cent. The duty cut is aimed at boosting local production and exports, as well as reducing prices in local markets. The finance ministry on January 30, notified the cut in duty on all goods for use in manufacture of cellular mobile phones to 10 per cent.
Despite the robust growth in this country, Apple's India share in its overall global sales remained modest -- constituting 1.5 per cent of its overall turnover of $389 billion in FY23.
Apple Inc has requested the ministry of electronics and information technology (MeitY) to give it 18 to 24 months' exemption to comply with the European Union (EU) regulation of putting an USB charging port in all its older smartphones, mainly iPhone 13 and iPhone 14, which are assembled, exported and also sold in the domestic market. Apple's stance is different from that of Samsung, which has been pushing for an immediate implementation of the EU regulation. All smartphones by the South Korean giant already comply with the EU rules.
The government's ambitious vision document that aims at achieving electronics manufacturing with a value of $300 billion by FY26 (including exports of $105-130 billion) could end up far lower than the target, according to a reality check this month. The reality check came from the Indian Cellular and Electronics Association (ICEA), which partnered with the government in preparing the document. The members of the ICEA are mobile and electronics companies, and its assessment, based on current trends, indicates that the total electronics production in FY26 will be around $225 billion.
The finance ministry is looking at a reworked proposal from mobile device makers on how to fight the rampant and growing smuggling of very high end phones. The proposal suggests reducing the basic customs duty (BCD) on phones which have a CIF (cost, insurance and freight or price at landing in the port) value of over Rs 35,000-Rs 40,000. The retail value of these phones is upwards of Rs 70,000.
The government has asked industry to provide a list of Chinese suppliers that would like to shift some capacity to India provided they are willing to set up JVs with Indian companies.
Apple's three vendors in the country have hit the milestone of creating 30,000 new direct jobs since the production-linked incentive (PLI) scheme for mobile devices kicked off in April 2021. Based on the government's estimate that one direct job in the electronics industry helps to generate three indirect ones, Apple's vendors, Foxconn Hon Hai, Wistron and Pegatron, are close to creating 100,000 direct and indirect jobs. The direct jobs that the vendors have created account for a fourth of Apple's commitment to generate 60 per cent of the new direct jobs out of the 200,000 jobs targeted by the government under the PLI scheme within five years.
Apple is hoping to assemble in India 25 per cent of all iPhones produced globally to reduce its heavy dependence on China.
By the end of December 2021, India had 389 million users who did not have access to mobile Internet, while there were 765.8 million mobile Internet users in the country.
Foundries in Taiwan account for more than 75 per cent of the chips that mobile devices made in India need, according to estimates by the Indian Cellular and Electronics Association (ICEA), which represents global and domestic manufacturers. The number is slightly lower, 60 per cent, if one considers all chips -- those of consumer electronics, PCs, laptops, autos, etc. This ties in with the fact that foundries in Taiwan, led by TSMC, account for over 70 per cent of the world's microchip supply, according to estimates by Gartner.
With supply of mobile chipsets running dry, manufacturers here are left with no option but to hike prices once again, making it the fourth round of increase in 2020.
The US tech major is planning to begin local production of its upcoming iPhone 12 by next April - within six months of its launch.
As much as Rs 8,000 crore worth of mobile phones in this segment - out of a total of Rs 15,000 crore - come into the country through the grey market. The government imposed the duty on these phones primarily to encourage domestic production but the strategy has failed as the bulk of high end mobile phones are currently imported.
In 2020 a round of hikes in customs duty on components like compressors, motors and printed circuit boards aggravated the situation, coronavirus crisis is now leaving manufacturers with no option but to hike prices despite fall in sales.
From the rollback of customs duty on key electronic components to fast tracking delivery of goods imported from China, players are looking for incentives on several counts.
A 15 per cent corporate tax rate for services companies in SEZs, setting up a fund for deep-tech startups and establishing clusters to demonstrate design-to-manufacturing capabilities of tech firms were some of the key demands made by the IT sector at the pre-Budget consultation on Monday. The participants shared their views and suggestions regarding Big Data, incentives for encouraging setting up of data centres, fiscal incentives for data localisation, incentives for pushing digital penetration in rural areas, and corporate guarantee to startups for competing with other nations.
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