In order to enhance India’s domestic manufacturing capacity and build its export capacity, the Internet and Mobile Association of India (IAMAI) has called for an assessment of the impact of the phased manufacturing programme (PMP), which has seen limited success, causing local mobile phone brands to lose their market share.
"The twin objectives of the PMP were to reduce India’s import dependency and increase domestic value addition. To this end, PMP relied on an import substitution approach and levied a 10-15 per cent Basic Custom Duty (BCD) on parts/components/sub-assemblies scheduled to be tariffed from 2016-17 to 2018-19. However, the programme has achieved limited success," according to a report titled "Make in India 2.0: Revisiting Mobile Manufacturing," released on Thursday by the IAMAI.
“India has a huge potential of becoming a manufacturing hub. The new NEP is export-oriented and mobile device manufacturing will be the largest segment accounting for a third of the size of the manufacturing sector. Govt has constituted a committee wherein the Finance Secretary, Secretary DIPP, Secretary MeiTY are among working together to promote large scale manufacturing and to make India an integral part of the global supply chain. We are preparing ourselves to become a global manufacturing nation for all electronic sector of India,” said Amitabh Kant, CEO, Niti Aayog.
The report also suggested focusing on large scale and high-end manufacturing of phones, and incentivising exports. However, it made a clear call to revisit the PMP.
"The PMP could not leverage global lead firms to relocate their manufacturing base to India. The programme achieved limited success in localising components manufacturing. Consequently, India’s local brands such as Micromax, Intex, Lava, and Karbonn have lost their domestic market share, and are struggling to sustain operations despite the introduction of PMP," the report said.
The report further noted that despite an increase in the number of manufacturing units, the production capacity per unit had seen a sharp decline when compared to 2014-15 levels.
The smaller operating scale of the existing manufacturing units indicates that PMP has failed to attract capital investment, with domestic players preferring to rely on imports, the report added.
The electronics system design and manufacturing (ESDM) sector is expected to grow at a compounded annual growth rate of 15-19 per cent to reach $123- 150 billion by 2020 in India.
Mobile devices are the largest segment of the ESDM sector in India, accounting for less than a third of the size of the sector, the IAMAI report noted.
India recently released the National Policy on Electronics (NPE) 2019, which was expected to give a thrust to economic development by achieving a turnover of $400 billion by 2025 and generating 10 million additional jobs.
The NPE 2019 further said that manufacturing of mobile handsets would be a focus area with a target of 1 billion mobile handsets by 2025, valued at $190 billion, including 600 million mobile handsets for export.
The Minister for Electronics and Information Technology, Ravi Shankar Prasad had said in June that making India an export house for electronic manufacturing was a key goal of the Narendra Modi-II government.