India set to manufacture $80 bn worth of mobile phone components: Study

India surpassed US to become 2nd largest global smartphone market in terms of users in early 2016 and is on track to cross half a billion users mark within next 5 years

India is set to manufacture $80 billion worth of mobile phone components over the next five years, a new study revealed on Monday, adding that this will help the country become a global manufacturing hub with advanced local manufacturing.

This offers a huge opportunity just from domestic demand perspective to manufacture mobile phones in the country and increasingly source components locally, thus, reducing the dependency on imports, said the study done by IIM Bangalore and market research firm Counterpoint Research.

"India can potentially be the world leader in mobile phone manufacturing ecosystem and this has to be done in a phased manner," said Aruna Sundararajan, Secretary, Ministry of Electronics and IT, Government of India, at an event here where the study findings were released.

India has surpassed the US to become the second largest global smartphone market in terms of users in early 2016 and is on track to cross half a billion smartphone users mark within the next five years.

The contribution of domestically manufactured mobile phones has increased from 14 per cent in 2014 to 67 per cent in 2016 and is further estimated to reach 96 per cent by 2020.

However, 67 per cent of the handsets manufactured in India contribute to just six per cent of the true local value addition with most of the OEMs still importing Semi Knocked Down components (SKDs).

"Out of 50 facilities from original equipment manufacturers (OEMs) to original design manufacturers (ODMs) and electronics manufacturing services (EMS) to component suppliers involved in manufacturing of mobile phones in India, almost three-fourth are Indian manufacturers, followed by Taiwanese with 10 per cent and Chinese with 10 per cent," the findings showed.

The components under phase I plan (2016-2018) like battery, chargers, cables, housing, packaging and others can be localised completely, thus driving the true local value addition from current six per cent to 17 per cent in just two years, the study noted.

The components under phase II plan (2018-2020) like display, camera and their sub components can further increase value addition from 18 per cent to 32 per cent by 2020.

The phase III plan will include the possibility of localising the semi-conductor components post 2020 including setting up semi-conductor fab and thus driving the true local value addition beyond 33 per cent.

"Under the proposed plan, we estimate that more than $15 billion worth components will be sourced locally over the period of five years through 2020 creating over a million direct and indirect jobs in India," the study said.