By Alisha Singhal
In a bid to drive manufacturing, and in turn create millions of jobs in the country, Prime Minister Narendra Modi introduced the flagship programme of Make in India. This programme is witnessing interesting trends in the domain of smartphone-manufacturing.
Not long ago, it was announced that Apple will start manufacturing the iPhone in India. This decision came in the aftermath of Mr Modi’s push for the same when Apples CEO Tim Cook visited the country in 2016.
On the other hand, locally, Reliances network Jio has shaken up the functioning of the telecom industry. Through this, coupled with the latest Jio phones, Reliance aims to reach a different base of low-paying buyers on an online platform. The feature phone is available for a refundable fee of Rs. 1,500, with 4G-enabled servicespractically free.
Manufacturing in India
Apple started its first manufacturing facility in Bangalore, to produce the iPhone SE. This model would be sold at a marginally lower price to attract the mid-segment smartphone buyers. The company even managed to place an assembled in India iPhone on the shelves. However, the shelves are yet to have a phone that is completely manufactured in the country.
Chinese mobile maker Xiaomi, together with Taiwanese contract manufacturer Foxconn Technology, is looking forward to starting manufacturing and assembling phones in India. Similarly, One Plus is looking forward to some manufacturing in the country.
There is a clear indication of foreign entities recognising India as the next major market for the digital revolution. However, with Jio coming in with its feature phones, Airtel has also announced to bring a 4G smartphone priced as low as Rs 2,500- Rs 2,700.
Is the government on a quest to attract foreign players, ignoring the emerging telecom players in the nation that can contribute substantially to the Make in India initiative?
Benefits of inviting foreign manufacturers
One of the major reasons why Apple is being pursued to set up manufacturing in India is to bring down the cost and subsequently the price at which it is sold in the country. The high prices are because of the heavy customs duties on the goods imported and the reliance on multiple distributors. This erodes off profit margins.
Secondly, it is beneficial for India to pursue Apple due to the relationship Mr Modi has been building with the USA. His multiple visits and playing a host to various dignitaries shows his willingness to put India on the global map.
Lastly, with India at the height of its digital revolution, along with government initiatives like Digital India, growth is tremendous. Hence, investment in distribution and manufacturing is required to meet the demands of the growing population.
Nurturing an enabling environment
The foray of telecom providers is a positive step towards revamping the digital and the Make in India cause. Currently, the Jio phones are being sourced from multiple manufacturers. However, the end plan is to manufacture them in India. The problem does not lie in convincing companies to manufacture in India. It lies in nurturing the base on which they will find it beneficial to start manufacturing in the country.
As of now, companies in India are not able to reach an effective cost, as compared to those in advanced countries like China. There is a lack of skilled labour and part suppliers. This goes hand-in-hand with a complex tax regime. These barriers make it difficult for companies to go beyond product assembly.
Apple’s plan to start manufacturing is phased, as the company is waiting for government approvals and tax breaks. These aspects are key to making a profit. Similarly, One Plus 3T is concerned that a 100% shift of manufacturing may lead to a compromise in quality.
Thus, the government needs to reflect on effective execution rather than ideation to take advantage of the plethora of opportunities lying ahead.
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