Every time you hear an Indian government official speaking about ‘Make in India’, you get the feeling that India is not far away from becoming a manufacturing powerhouse. Big numbers are cited, claiming that most global brands want to set up shop in the country.
While that’s true, a recent analysis from Counterpoint clearly tells us that most of Make in India right now is relying on materials from abroad, with markets like China likely to be our go-to vendor region.
The report says that India had to import $13 billion worth of mobile components in 2018, with only basic mobile components like charger and power bank among others getting sourced locally.
Even after that, local value addition to manufacturing has increased from meagre 6 percent in 2016 to 17 percent in 2018. The report also confirmed that, compared to just two assembling plants in 2014, there are now 120 units functioning in the country.
This is likely to be the bone of contention of experts, with India unable to get its full-fledged manufacturing objective up and running.
Part of the reason is the delay in The Ministry of Electronics and Information Technology's Phased Manufacturing Programme (PMP), as the implementation of customs duties under Phase III, which targets display assembly, touch panel/cover glass assembly and vibrator/motor ringer has been delayed, said the report.
The critical components for a phone; camera module, display are still getting imported and one look at their bill of materials (BoM) tells you the reason for a bloated importing expenditure for companies.
Sourcing of chips locally will happen only once the component ecosystem for low-value components is strengthened and export incentives are brought into force, said Tarun Pathak, Associate Director at Counterpoint Research.
The possibility of original equipment manufacturers (OEMs), like Reliance Jio and several Chinese brands, sourcing chipsets from within the country is still more than four to five years away.
Even the likes of OnePlus, Xiaomi, Samsung and Nokia among others have multiple local manufacturing operations, albeit limited to assembling only.
With the potential to grow and an untapped consumer base, global suppliers are likely to enter the country in the coming years, set up their base and make use of the cheap but educated labour to aid its development.
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