Exploring the Surge in Mobile Device Production in India: Implications and Opportunities

India has set a target of achieving US$ 7 trillion GDP by 2030, for which growth in the digital sector and an increase in exports is crucial. In these two areas, electronics manufacturing, led by mobile production, will play a critical role in achieving the 2030 GDP goal for India.

India is one of the biggest manufacturing hubs after China, especially for producing mobile devices. The leadership is driven by availability of skilled labour force, government support, and growing infrastructure facilities. Let’s delve deep into the implications and opportunities arising from increasing mobile device production in India.

Production, Imports and Exports trend over the past decade

Source: Business Standard

• Surge in mobile phones production in India.
  • The India Cellular and Electronics Association (ICEA) has reported significant growth in mobile phone production, achieving a CAGR of 40.76% from 2015 to 2024. In FY24, the industry reached a milestone of US$ 49.55 billion (Rs. 4,10,000 crore).
  • Manufacturing facilities established by international players strengthened the domestic mobile manufacturing Industry, making India the second-largest producer of mobile phones after China. The sector has transitioned from being 78% import-dependent in 2014 to 97% self-sufficient, reflecting significant strides under the 'Make in India' initiative.
  • In 2011, India was ranked as the eighth biggest importer of mobile phones. The increasing trend of importing mobile phones resulted in India reaching its highest level of smartphone imports, nearly US$ 8 billion, in 2014-15. Consequently, the government stressed introducing an import substitution policy to boost domestic mobile phone manufacturing to meet a larger portion of the domestic demand.

Source: ICEA

In exports, India’s ranked has improved from 11th in 2011 to 6th in 2022, which further improved to 5th position in 2023.

• Mobile phones export over the years

Source: Times of India (ICEA)

In 2014-15, mobile phone exports from India were at US$ 0.2 billion (Rs. 1,556 crore) which grew at a CAGR of 62.06% from 2014-15 to 2023-24 reaching US$ 14.5 billion (~Rs. 1,20,000 crore) in 2023-24.

As projected by ICEA, around one-third of India's total mobile phone production, valued at US$ 49.3 billion (Rs. 4.1 lakh crore), is expected to be exported during FY25. Apple and Samsung are expected to be the primary contributors, accounting for US$ 14.4 billion (Rs. 1.2 lakh crore) of this export value.

Major smartphone companies such as Apple (Factories in Tamil Nadu and Karnataka) and Samsung (Noida) have played a significant role in increasing mobile phone exports from India, with a large quantity being sent to markets including UK, Netherlands, Austria, Italy, the Middle East, North Africa, and South America. Apple is expected to contribute most to this growth, accounting for 65% or around US$ 10 billion of the total exports, marking a doubling from US$ 5 billion in FY23. This achievement could be notable as Apple became the first smartphone brand to achieve this level of exports from India. Apart from these players, companies like Xiaomi, Oppo, and Vivo are also manufacturing mobile phones in India (Noida).

This shift towards making things locally will not just be beneficial to the economy but will create many opportunities for people of the nation.

Factors driving growth:

Implications and opportunities

• Growing export potential- Mobile phone exports, which stood at ~US$ 186 million (Rs. 1,556 crore) in 2014-15, reached ~US$ 14.5 billion (Rs. 1,20,000 crore) by FY24, indicating an impressive CAGR of 62% over the decade. With tech companies across the globe looking to diversify their supply chain, an inclusive mobile device manufacturing industry in India can capitalize on the emerging trend.
• Improving trade balance- As per the Commerce Ministry, India's smartphone exports to the US increased US$ 3.53 billion during the April-December period of the FY24, marking a significant increase from US$ 998 million in the corresponding period of the preceding year.
• Boost to economy employment/Contribution to the GDP- With increased demand and growth in the production of mobile phones, the sector has employed around 12,00,000 employees and will create 2,80,000- 3,00,000 lakh new jobs directly or indirectly in the next 12-16 months.
• Infrastructure Development- To support the increased production of mobile phones, government is looking towards developing top end infrastructure, including manufacturing facilities, logistics networks, and power supply. Dixon Technologies, a leading Indian firm, has invested US$ 30.93 million (Rs. 256 crore) to build its Noida factory. The increasing infrastructure spend to support growth in mobile production offers an opportunity for the ancillary sector to expand their reach and market size.
• Supporting Industries growth- The expansion of mobile phone production stimulates growth in related industries such as electronics components manufacturing, software development, telecommunications, retail, and e-commerce. These supporting industries benefit from increased demand, collaboration opportunities, and technology spillovers, fostering a multiplier effect on the economy.\

Outlook

India Smartphone Market was valued at US$ 44.15 Billion in 2023 and is expected to reach US$ 88.99 Billion by 2032, at a CAGR of 8.1% during the period 2023 – 2032. Further, ICEA expects Mobile phones to contribute more than USD 50 billion in exports by 2025-26.

India's rise as a global leader in mobile manufacturing is remarkable, supported by the ‘Make in India’ plan and other government initiatives and strategies to boost the manufacturing sector that position it as among the preferred destinations for electronics device production. As India is now the second-largest smartphone market internationally, India is restructuring mobile manufacturing dynamics, drawing the attention of top companies, and supplying significantly to the global supply chain.