Statsguru: Story of the home-made handset and India's upward mobility

One of the major objectives of the Indian government has been to boost electronics exports and reduce dependence on imports. Electronics exports have increased 1.9 times over the past decade, from $10.9 billion in FY13 (2012-13) to $20.2 billion in FY22 (2021-22). For the first six months in FY23, exports of consumer and industrial items at $13 billion were higher than the exports for FY19 (chart 1). But imports grew faster. A 2.1-times increase in imports led to the trade deficit widening from $19 billion in FY13 to $42 billion in FY22. In the first half of FY23, India’s trade deficit in electronics items was at $21 billion (chart 2).

But for mobile phones, the story is different. An impetus on domestic production has meant that the increase in exports was coupled with the decline in imports. A Business Standard analysis found that imports declined faster than the increase in exports of mobile phones. India’s exports of mobile phones doubled from $2.7 billion in FY13 to $4.8 billion in FY22. Imports in FY22 at $1.5 billion were only a third of $4.7 billion in FY13 (chart 3). This led to the country turning from a net importer of mobile phones to becoming a net exporter. India, which registered a trade deficit of $2.1 billion in the mobile phone market in FY13, had a trade surplus of $3.3 billion. The gap is expected to increase as India supplements China in manufacturing Apple phones (chart 4).

India’s meteoric rise over the last five years remains unmatched by any other economy. Analysis of data from the International Trade Centre shows that India registered a compounded annual growth rate of 143 per cent between 2017 and 2022. In contrast, the other top manufacturers barely managed a double-digit growth during this period (chart 5). 

But India’s growth has come on a smaller base, and the country’s share in global mobile phone exports is still minuscule. Although India’s share in exports went up from 0.1 per cent in 2017 to 1.6 per cent in 2021, it pales in comparison to China, which commands nearly half of the market, or Vietnam, which has an 11.8 per cent share in global mobile exports (chart 6).