India handset production to double to 200 mn this year

Handset manufacturers are planning to expand their production in the country in 2017

Manufacturing of mobile handsets in India is expected to reach 200 million in 2017 backed by incentives announced in the Union Budget and a push for localisation by the government, according to CyberMedia Research.

Handset manufacturing has been on the rise for the past three years but the highest production was 180 million in 2012-13, before Nokia exited India. During 2015-16, 110 million handsets were manufactured or assembled locally, up from 54 million in the previous year.

Handset manufacturers like Vivo, Oppo, Intex, Karbonn and Coolpad are planning to expand their production in the country in 2017.

According to Amitabh Khurana, head of manufacturing at Intex, the company’s local production will jump significantly when its plant at Greater Noida in Uttar Pradesh becomes operational in July.The plant has a production capacity of 35 million handsets a year.

Vivo is also planning to expand production at its plant in Greater Noida. “Our 30,000 sq m production facility is the seventh largest assembly facility outside China. The unit has a capacity to produce 1 million smartphones a month,” said Vivek Zhang, chief marketing officer, Vivo India.

Earlier, Kent Cheng, chief executive officer, Vivo India, had said the company would expand its capacity in India because sales here were growing rapidly. Vivo was targeting a 7 per cent share of the smartphone market in India by December 2016 but ended up with a 10 per cent share to emerge as the second biggest player.

Shashin Devsare, executive director, Karbonn Mobiles, said his company had a target of increasing the local production of 4G handsets to 100 per cent this year. At present, Karbonn procures an insignificant number of such handsets locally. It also has a target of manufacturing 70 per cent of its handsets by end 2017 in India. Karbonn built a factory at Bawal in Haryana last year with a capacity of 30 million handsets a year.

Syed Tajuddin, chief executive officer, Coolpad India, said, “We estimate we may have to increase local procurement by 40 per cent this year. We are using four assembly lines, which will go up to seven.” Coolpad produces handsets at a facility owned by Videocon in Aurangabad in Maharashtra.

Experts said the excitement behind manufacturing and assembling handsets in the country was driven in part by government sops. Companies are offered excise duty relief and other incentives by the Centre and states. Around 37 handset manufacturing plants have come up in India in the last two years.

According to CMR, Rs 522 crore of the Rs 745 crore allocated for the Modified Special Incentive Package Scheme in the current year could be dedicated to encourage manufacturing of mobile handsets. The allocation is based on the proportion of electronics items being produced for handsets in India. The scheme was launched in 2012 to promote local manufacturing of electronic items and was later extended to components used in mobile handsets.