India is trying to become the global manufacturing hub by making smartphones, which has boosted economic growth and created jobs. The ‘Make in India’ policy, which encourages foreign manufacturers to move their manufacturing to India, has made India a top smartphone maker…
As the globe ‘de-risks’ supply chains from China, India can realize its long-held dream of becoming a global manufacturing hub. For decades, India’s authorities have believed they can imitate Northeast Asian economies like China, Japan, and South Korea’s manufacturing-led economic growth model. Like China, India has a large pool of trained and unskilled labor, needed to become a low-cost manufacturer and exporter.
The ‘Make in India’ initiative encouraged foreign firms to transfer their manufacturing to India. Though successful, the plan has failed to make India the world’s factory, a title still held by China.
The effort has made India a top smartphone maker.
In 2014–2022, India shipped 2 billion domestically produced smartphones and feature phones. In 2022, 98% of Indian phones were domestically made and 16% exported. In 2014, only 19% of Indian phones were domestically made.[1].
The government hopes to increase economic growth, generate jobs, and reduce imports by making India a top smartphone maker. China, Korea, and Japan started by making cheap items in huge factories with legions of unskilled and skilled labor. India will too. India will follow China, Korea, and Japan in becoming manufacturers and sellers of world-class products and home to marquee brands.
Besides ‘Make in India’, various policies and initiatives are in place to mimic these countries’ growth paths in India.
The Production-Linked Incentive (PLI), which subsidizes Indian firms, has been successful. In 2020, the PLI subsidized only three manufactured goods categories. It now covers 14 categories, including mobiles.
The Indian government gave PLI’s 14 sectors 1.97 crore. Manufacturer applications were accepted 733 times through March 2023. Though manufacturers are supposed to invest INR 3.65 lakh crore, just INR 62,500 crore has been invested. Investments have increased production and sales by 6.75 lakh crore and created 3.25 lakh jobs[2].
Smartphones have been PLI’s biggest success. In the current fiscal year, mobile phone exports should exceed 1.2 lakh crore. Such exports were INR 90,000 crore last year.
In 2012, India established the Modified Special Incentive Package Scheme (M-SIPS) to promote semiconductor and display manufacturing. So yet, the plan has had little influence on Indian semiconductor manufacturing.
India needs a more skilled workforce for ‘Make in India’ and ‘PLI’ to succeed, according to the government. India’s leaders recognise that it requires competent people in every area, particularly the tertiary sector, to thrive in the 21st century.
In 2015, India started the National Skill India Mission to quickly establish such a workforce. The mission addresses the fragmented approach of prior skill-building programs[3]. Its goals carefully match the government’s mission to make India a dynamic, modern economy. It will help train workers for modern smartphone manufactures.
The Indian government is overhauling its infrastructure, which is its biggest growth barrier, in addition to training more workers.
India is building infrastructure faster than any other country outside China. Road capital spending in India is expected to rise from.5% of GDP in 2020 to.8% in 2023. Every year, the country adds 10,000 kilometers of highways. India will spend 1.7% of its GDP on infrastructure this year, twice as much as the US and most European nations.
The continuing construction of such infrastructure will cut device transport costs in India and abroad.
To facilitate foreign trade in India, the government created a National Single Window System. Foreign traders in India can submit all information to one agency with this service. They avoid several agency visits for clearances, documents, and permits. Foreign companies entering the Indian market will find it easier than ever with this effort.
A major multinational praised the Andhra Pradesh government’s NSWS in January for making business easier. NSWS has had many successes[4].
India invests heavily on R&D to promote innovation. The government invests $65.2 billion on R&D, more than the UK. Top smartphone manufacturers have R&D centers in India. They develop goods and services to solve local and global problems at these centers. However, India spends only.65% of its GDP on R&D, and its percentage is declining. India’s GDP spending nearly reached $100 billion in 2019[5].
To stimulate innovation in the future, government and industry partnerships are needed. Successful government-industry collaboration will overcome barriers and boost innovation. These alliances will drive India’s manufacturing goals.
The Indian government raised laptop import charges to encourage foreign laptop and electronics manufacturers to establish manufacturing in India. On November 1, 2023, import duties will begin. After the announcement, 32 companies, including Dell, Asus, Foxconn, and HP, sought for licenses to manufacture laptops, PCs, and servers in India. Their presence into India will boost investment and employment.
Through incentives, subsidies, and regulatory reforms, these initiatives increase domestic electronics and mobile device manufacture. Major smartphone makers have been enticed by this technique, creating jobs and transferring technology. Global tech companies have created a solid supply chain ecosystem with component suppliers, contract manufacturers, and local assembly facilities, making India the second-largest mobile phone manufacturer behind China.
Indian labor is abundant and cheap, boosting its potential as a mobile phone manufacturing powerhouse. As China, Korea, and Japan have shown, steady manufacturing capability growth from assembly to advanced components is vital to realizing this potential.
Imported part tariffs must be eliminated for growth. Increasing phone import levies can attract manufacturers to India, boosting investment and job development.
Domestic smartphone makers should prioritize top-notch technologies for Indian and worldwide success. India is a major IT player because to its ‘Make in India’ strategy, government assistance, infrastructural investments, and R&D. India’s smartphone manufacturing star is rising as the globe seeks supply chain alternatives, and its trip will be worth following!
