While no single country can aspire to control an entire supply chain domestically, India should aim to increase local value addition in phone manufacturing from 10-15% to 35-40%, according to a key government official on December 5.
"How does India retain a significant portion of this manufacturing pie?" Simply put, we must ensure that we are competitive enough in the component manufacturing industry for this to occur," said S Krishnan, Secretary at the Ministry of Electronics and Information Technology (MeitY).
"Today, when we speak of mobile phones manufactured in India, we must also recognise that in many of these cases, the value addition is likely to be between 10 and 15%." "We need to get closer to 35-40 percent," he said at the Carnegie-organized Global Tech Summit 2023.
Krishnan further stated that a single country is unlikely to be able to control the entire supply chain, and that China accounts for roughly 40-45 percent of the electronics value chain.
"Global value chains are a marriage of our overall security interests and the fundamental economics of division of labor and specialization." "You need to produce where it is most efficient, but a resilient supply chain is essential today," he said.
India has set an ambitious aim of producing $300 billion in electronics devices by 2025-26, and is offering hefty incentives through its production-linked incentive (PLI) schemes to entice device firms looking to expand their manufacturing capabilities beyond China.
Shipments of mobile phones under the 'Make in India' project surpassed 2 billion units in 2022, marking a historic milestone. This was supported by a Compound Annual Growth Rate (CAGR) of 23% during a 9-year period.
In 2022, more than 98 percent of shipments in the whole market will be 'Make in India,' up from 19% when the current administration took office in 2014. Local value addition in India is now at more than 15% on average, up from the low single digits eight years ago.
According to the government, almost 99 percent of mobile phones used in India now are manufactured locally, and the mobile manufacturing business is worth $44 billion.
Apple has aggressively increased domestic production of its premium iPhone products in India over the last year. After exceeding the $7 billion production threshold in the previous fiscal year, the Cupertino tech giant reportedly wants to boost production in India to more than $40 billion in the following 4-5 years.
Meanwhile, Google recently revealed intentions to manufacture Pixel smartphones in India, bolstering the country's ambitions to become a global manufacturing hub. It intends to begin local manufacture with the Pixel 8 and Pixel 8 Pro, with the first devices anticipated in 2024. To develop these devices, the business will collaborate with both domestic and international manufacturers.