Guest post by Sayan Sarkar.

Make in India’ initiative is Indian Prime Minister, Narendra Modi’s ambitious plan to bring in industries and help them manufacture their products within the country itself. Barely a year since the launch of the initiative, a number of mobile handset manufacturers have boarded the ship, while many are mulling to do so in the future. In this article, we aim to talk about the advantages for manufacturing devices in India and would also touch upon the companies which have already joined the initiative.

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Why ‘Make in India’ is beneficial for OEMs?

In the last financial budget, the Finance Minister of India, Mr. Arun Jaitley made many changes to the country’s industrial policies to make India an ambient place for manufacturers. He has significantly increased the import duties to 12.5% from the previous 5% – a sharp 250% increase. On the contrary, a OEM manufacturing devices in India can import spares at a bare minimum duty of 1%. Hence the new policy practically forces OEMs to manufacture their devices in India to save a huge amount of money by paying lesser duties.

While some may complain that this policy will affect the Indian smartphone market in the long run as the companies might start ignoring the country! But would any sane company ignore a country which presently ranks third in the number of smartphone users? In fact the way Indian smartphone industry is progressing, it’s just a matter of time before we tip US and aim at China.

Unlike the previous beliefs, the market has responded quite well to the government’s call and many have started manufacturing in India. Be it global giants like Samsung, HTC or local OEMs like Lava, Karbonn – all have joined the ‘Make In India’ bandwagon.

First Move

The first move by a mobile company was taken by the local OEM Micromax. Previously, the company used to import devices from China and rebrand them in India. But soon they realised that making in India was a better proposition. They opened their first factory in the northern state of Uttarakhand where they started manufacturing feature phones and tablets. They are even producing their LED TVs from the same plant. But this was before Modi’s ‘Make in India’ call.

And this time too the company responded well. Micromax’s online only sub brand YU came up with the first ‘Made in India’ smartphone namely the YU Yuphoria!

Time for the foreign brands to make a move

It all began with Samsung and Sony! These were the first among the global giants to announce India as a destination for manufacturing their devices.

The Korean consumer electronics giant already had invested in a production unit in Noida back in 2011 but not much had materialised out of the plant and it wasn’t fully operational. But in January this year, Samsung pledged to invest Rs 517 crore into the plant and even set up a 35,000 square feet campus for capacity and skill building. The best part is that company had also decided to manufacture their flagship Galaxy S6 and S6 Edge devices in the country by the middle of the year.

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Last year the company had tied up with a number of Industrial Training Institutes (ITI) of government of India to train personnels for manufacturing their Exynos SoCs.

Following the path laid by Samsung, Japanese manufacturer Sony also announced its plans to set up a manufacturing unit in the country for its mobile and TV divisions. The plant is supposed to cater to foreign markets of Africa and Middle East as well. Presently, the company imports all its products to India from the company’s production units in Thailand, Malaysia, China and Japan.

Sony’s Head India Operations, Kenichiro Hibi had mentioned that the company is yet to zoom into an exact location to set up the plant. But they are working closely with the government’s on various stats to set up a plant. Our bet is on a plant either in UP or in the southern states of India (preferably Telegana/Andhra Pradesh).

According to a recent report, the Taiwanese company – HTC – has also announced its plans to ‘Make in India’. They haved joined hands with Global Device Network to manufacture their devices in India. The company previously used to manufacture devices for the local OEM called Zen mobile. HTC targets to produce only low and mid-range device in the country though. Presently, their sole aim is to manufacture devices ranging between Rs 10,000 ($158) to Rs 25,000 ($396). This would help the company to establish themselves in the budget section – a section where the company is nearly non-existent.

Chinese brands too don’t want to miss out

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(Pic credits: PIB)

Recent rumors suggest at a purported move by the world’s third largest mobile manufacturers, Xiaomi, to start a plant in India in Andhra Pradesh in partnership with Foxconn. Even the Indian Prime Minister during his visit to China paid a visit to the Xiaomi office to discuss their plans on ‘Make in India’.

In the meantime, Huawei has invested approximately $170 million or Rs 1051 crores to open an R&D unit in the southern city of Bengaluru. Huawei previously had an R&D department in the country but it was never as big as this. It is the company’s largest R&D facility outside China. The company in fact received clearance from the Indian government to manufacture devices in India after a long wait of 19 months since filing an application. It will make them the first Chinese brand to manufacture devices locally in the country.

India is an important overseas market for Huawei,” Allen Wang, president of Huawei’s consumer business group in India, told Reuters on the 15th of June this year. “We aim to become a top three brand in India within three years.

There’s also a word on OPPO and Gionee to set up their plants in the country. Gionee, which was one of the first Chinese companies to come to India earlier announced its plans to start assembling phones in India while planning a full-fledged factory over a three-year horizon. Oppo too announced its plans to set up manufacturing as early as August this year.

Even smaller brands like Phicomm and Infocus have shown an earnest interest.

Post the launch of the Moto G 3rd gen, the Lenovo owned company has also shown interests to manufacture in country. If so, then India would be the third destination where Motorola would be manufacturing their device. They already do son in China and Latin America. This might also lead to the reopening of the existing Motorola factory in Chennai.

Microsoft doesn’t want to lose a share of the pie

Microsoft is in talks with Taiwan based mass manufacturer, Foxconn Holdings, to manufacture their devices locally in the country. In fact, Foxconn’s top official had visited India a few days back to zero on a location to start their plant. As of now they have two places in the neighbouring states of Andhra Pradesh and Telengana on the radar.

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(Pic credits: Bloomberg)

While the Telengana plant will be used for manufacturing the Lumia devices, Foxconn has kept the Andhra plant solely for Xiaomi. The company has some ambitious plans too – they aims to set up round 10-12 manufacturing units across the country by 2020! Some rumors also suggest that Apple are in talks with Foxconn to assemble their iPhones down here. But let’s not delve more into the rumors as of now!

Indian OEMs too joins the party

Seeing their global counterparts stepping on the gas, local OEMs like Karbonn, Intex are now in a mood to follow the mantra – Why should ‘they’ have all the fun?

Karbonn recently decided to invest approx. Rs 800 crore in their manufacturing plants in Noida and set up a new one in Telengana. The company aims to assemble devices ranging between Rs 2,000 ($30) to Rs 7,000 ($110) in these plants.

We are not dependent on external funding. We are the only brand that has announced two manufacturing units. Out of the total, Rs. 450 crores has been allocated for our Telengana plant and Rs. 100 crores we have invested in setting up Noida assembly unit,” said Shashin Devsare, Karbonn Mobiles Executive Director. He further added, “In a year’s time, we expect local production to meet 60-70 percent of our domestic market requirement

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(Pic credits: Business Today)

Same can be said about Videocon and Celkon as well. Celkon too have shown their allegiance to the state of Telegana by deciding to set up a plant in a town called Medchal. Videocon on the other hand decided to invest on their existing plant in Salt Lake, Kolkata to raise the capacity of the production line. Both the companies mainly plan to produce feature phones from their plants.

On the other hand during MWC 2015 Shanghai, Intex technologies limited announced their plan to invest a total of Rs 1,500 crore in manufacturing and research in India. They would bifurcate the funds into two parts – Rs 1,000 crore for setting up a new plant in Noida (their sixth so far) and expanding the existing ones and another Rs 500 crore in R&D. The R&D unit is mainly working on improving the software side of the OEMs.

Spice mobiles have treaded the same path too by signing a MoU with the government of UP to set up a plant in the state. They have already invested Rs 500 crore into the project.

Recently, after the launch of their first Android One device, Lava Mobiles also showed their interest to assemble in the country. In fact it they had decided to pump in Rs 2,615 crores in batches for the next seven years to set up two new assembling units in the country. The company already has one unit in Noida, which manufacturers nearly half a million smartphones every month. With the addition of these two new units the company aims to push up the production to a whopping 18 million smartphones/month! The allocated funds will also be used for R&D purposes too.

On the expansion plans, Lava International chief manufacturing officer Sanjeev Agarwal said, “The funds will be deployed over a period of seven years. We are in discussions with various state governments and we should be able to close in on a decision in the next three weeks. We already have a unit in Noida and by beginning of 2017, the second one will be operational too. We will take a call on the third one later. Once all the three plants are functional, we expect our total output to be 18 million units a month.”

Conclusion

It now appears that the initiative to manufacture devices in a country with the third largest smartphone user base has been taken well by the industry. More such announcements will be followed in the coming days and we will continuously update the section with more information as and when they happen. Do bookmark this page for future reference.

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One thing we need to make it very clear is that the industry is looking to save big money (as much as 11%) by assembling phones in India. This is not same as manufacturing phones. But then, true manufacturing of phones will take a long time and this is a good start, considering Make in India is just an year old campaign. True manufacturing will need the whole mobile phone ecosystem to develop, which not only needs time, but also huge investments. Also, some experts argue that manufacturing prowess comes at a cost on the environment, and India can’t afford that. That’s for another blog post. For now, Make in India mostly implies Assemble in India when it comes to smartphones.

So far it seems like Telengana is reaping the most from the government’s ‘Make in India’ initiative – at least that’s the case for the mobile industry. But we firmly believe in the fact that the big gainers of this initiative are the consumers. Expect some ‘Made in India’ devices by reputed smartphone OEMs at darn cheap prices.

This was a guest post by Sayan – who is a tech geek by heart who presently works as a Stringer at Gizbot. You may also find him working on his own blog Techabreakk.com. When he is free, Sayan spends most of his time reading motivational books, posting reviews on amazon.in (Top 50 reviewer) and answering all your tech related queries on Twitter. To know more about him get in touch with him on Facebook and Twitter.


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Author

Sayan is a technology aficionado who shares a keen interest in the booming startup scene in India. Prior to joining TechPP, he has had stints at GizBot and IBTimes UK. Currently based in Kolkata, Sayan is pursing a degree in Dental Surgery.