Thursday, 10 Oct, 2024
By: Yash Gupte
India produced mobile phones worth Rs 85,000 crore in FY22, 30 percent higher than FY21. Image Source: IANS
The K Chandrashekar Rao government said on Monday that a letter from Foxconn Technology Group had resolved the issue, despite claims made by both the Karnataka and Telangana governments questioning the site of the company's future manufacturing facility.
The two southern states- Karnataka and Telangana have once again locked their horns, but this time the bone of contention is not any river sharing agreement or any regional issue. The two states have been indulged in a battle for setting up the manufacturing unit of the Foxconn Company. The K Chandrashekar Rao government said on Monday that a letter from Foxconn Technology Group had resolved the issue, despite claims made by both the Karnataka and Telangana governments questioning the site of the company's future manufacturing facility. However, the Basavaraj Bommai government in Karnataka had been stating that an investment for a manufacturing facility of Foxconn close to Bengaluru was expected to be made until as recently as March 2.
The Telangana Chief Minister’s Office released the letter by Foxconn Chairman Young Liu saying: “As discussed with you on March 2, Foxconn is committed to setting up a manufacturing facility at Kongara Kalan and I seek the support of your team in operationalizing the Kongara Kalan Park as early as possible.’’
Following a meeting with company representatives, including Liu, Bommai's office released a statement on March 2 announcing the same, “The world’s leading electronic manufacturing company Hon Hai Technology Group (Foxconn) is expected to make a huge investment in the state and around one lakh jobs are likely to be created… A MoU was signed in the presence of Chief Minister Basavaraj Bommai.”
The governments of both the states have been laying their claims over the set-up of the manufacturing unit. But, it seems that the state of Telangana is a step forward and tends to successfully bag the project. Both Karnataka and Telangana will hold elections this year, with the BJP fighting hard to maintain its hold on power in the former and attempting to unseat the Bharat Rashtra Samithi government in the latter. A combined project of Vedanta and Foxconn that was in the final stages of negotiations for a site in Maharashtra had switched to Gujarat last year ahead of the Gujarat elections. The BJP was accused by opposition parties of putting electoral interests ahead of those of Maharashtra.
Source: Ministry of Electronics and Information Technology
The above instances shows the growing importance of the mobile manufacturing market in India. India produced mobile phones worth Rs 85,000 crore in FY22, 30 percent higher than FY21. Thanks to the massive production, there was also a drop in the import of mobile phones at Rs 600 crore during the first quarter, while it was as high as Rs 3,100 crore during the same period in FY21. This also helped reduce our dependence on Chinese imports reduced to 60 percent from 64 percent in fiscal 2021, and is expected to fall further in the medium term. According to the ratings agency Crisil, mobile manufacturing will be an Rs 3.5-4 trillion industry by 2024. According to a recent report by Deloitte, the demand for smartphones in India is predicted to increase at a compound annual growth rate of 6 percent, from 300 million in 2021 to around 400 million in 2026.
India emerged as the world’s second largest mobile phone manufacturing hub as its production of devices in terms of value has grown by over two times in FY 22. China is the largest producer of mobile phones in the world followed by India, Vietnam, Indonesia, the United States and Brazil. These countries account for 70 percent of all mobile phone production worldwide. According to India Cellular and Electronics Association (ICEA), the exports of mobile phones from India have already jumped about 75 percent between FY 21 and FY 22. This shows the extent of the mobile phone manufacturing market in India.
One of the important government schemes responsible for silently revolutionalising the mobile phone manufacturing in India is the Production Linked Incentive (PLI) scheme. A programme called Production Linked Incentive, or PLI, seeks to reward businesses for increased sales of goods produced domestically. The programme invites foreign businesses to open offices in India, but it also intends to incentivise domestic businesses to open or expand their manufacturing facilities, create more jobs, and lessen India's dependency on imports from other nations. It was introduced as a part of the National Policy on Electronics by the IT Ministry to give incentives of 4-6 percent to electronic companies, manufacturing electronic components like mobile phones, transistors, diodes, etc. The government aims to make India an integral part of the global supply chain and enhance exports. The Assembly, Testing, Marking and Packaging (ATMP) units for mobile phones were also envisaged to be established during the first phase of the PLI scheme, which was devoted to the Large Scale Electronics Manufacturing sector.
India is not only a rapidly growing economy, but also a rising digital economy with high potential.
