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Govt task force to draw up $110-bn mobile export business blueprint

Subhomoy Bhattacharjee/New Delhi 10 Jul 19 | 09:04 PM

To figure out how to create a $110-billion mobile phone export business from India, the government has decided to set up a secretary-level task force at the Centre to be steered by NITI Aayog Chief Executive Officer Amitabh Kant. The push to set up the task force has come from the Prime Minister’s Office (PMO). 

Principal Secretary in the PMO, Nripendra Misra, has written to Kant to include the finance, commerce and Ministry of Electronics and Information Technology secretaries in a team to form a policy that could overcome India’s disability vis-à-vis other Asian countries as a mobile manufacturing hub. 

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While the news could please some of the largest global manufacturers of mobile phones who are scouting for alternatives to China to locate some of their manufacturing centres, such a policy could be tricky for India to execute, too. This is because the list of the world’s largest manufacturers includes Chinese giants Huawei, along with Xiaomi and Oppo, besides Apple and Samsung. Huawei is in the crosshairs of the US government and any move that could benefit it in India might be difficult for New Delhi to carry through. 

Of the current global market for mobile handsets and their components of about $485 billion, nearly 60 per cent of the market is made up of exports by the companies. Almost all of these exports are concentrated among the top five companies from their manufacturing bases strewn around China, South Korea, and Vietnam. 

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The PMO has suggested the secretaries should form a policy that eliminates India’s weakness vis-à-vis other Asian countries. The measures to do so could include offering tax incentives that are World Trade Organization-compliant. In addition, India can offer low manufacturing and design cost with highly qualified information technology resources. The window of opportunity for India has arisen because of the massive trade dispute between the US and China because of which several global companies are scouting for alternative locations.

A government source said simply raising the level of production of low-end mobile handsets to cater to the domestic markets will not help. Instead, India has to push its way into the export market with higher value-addition products. 

While India has clawed up in the manufacturing chain to record over $25 billion of production in 2018-19 (FY19), less than 11 per cent of it was exported. According to the commerce ministry data, export of telecom instruments — including mobile phones — was $2.7 billion in FY19. This is, however, a 125 per cent jump year-on-year (YoY). 

India’s growth was largely helped by Samsung’s production numbers from its Noida factory. The unit is expected to also double its current production capacity, from 68 million units to 120 million units by 2020. But compared to the global sweepstakes, the Indian production numbers are still small change. 

The National Policy on Electronics 2019 has set a manufacturing target at $400 billion by 2025, of which a third or about $110 billion is meant to come from exports. To put those numbers into perspective, India’s total exports of all goods was $330 billion in FY19, a growth of 8.75 per cent YoY.

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