India’s mobile manufacturing soars with 16-fold growth in 2024

India’s domestic mobile manufacturing industry has witnessed an astounding 16-fold increase over the last decade, with production soaring from USD 3 billion in 2014 to a promising USD 49 billion in 2024. This remarkable growth not only establishes India as a significant player in the global mobile manufacturing sector but also underscores the immense potential of the industry. 

India’s mobile manufacturing industry is poised for a bright future with burgeoning exports and domestic market. However, it is not without its challenges, including high tariffs, regulatory hurdles, and a lack of gender diversity in the workforce, which could potentially hinder its progress.

The key findings are part of the survey report ‘India’s Mobile Manufacturing Ecosystem: Challenges and Opportunities’, conducted by the Broadband India Forum (BIF) in collaboration with Koan Advisory. Based on an empirical study of the sector, the report highlights the industry’s successes and the challenges that threaten to hinder further growth.

The BIF-Koan report also identifies India’s highly complex tariff structure as a significant barrier to increasing domestic value addition (DVA). The study found that tariffs on mobile components often exceed 10%, with some going as high as 25%. Despite the government’s initiative to make these tariffs more friendly for localisation, India’s DVA remains at 18-20%, far behind China’s 40%.

The survey methodology involved analysing import and export data and interviewing key industry stakeholders to understand the impact of tariffs on local manufacturing. It concluded that these high tariffs contribute to a 7-9% cost disability for manufacturers in India compared to their global counterparts.

To enhance India’s competitiveness, the report recommends rationalising the tariff structure by reducing rates to three slabs: 0%, 5%, and 10%. This simplification, along with a reduction in tariffs on capital goods, could lower machinery costs, which is essential for mobile manufacturing.

Ease of Doing Business: A Critical Concern

The report highlights regulatory hurdles as another significant challenge in India’s mobile manufacturing ecosystem. The study points out that complex regulations—such as the frequent issuance of Quality Control Orders and sudden changes in customs classifications—create operational difficulties and raise manufacturing costs.

The survey gathered data from industry experts and analysed case studies to illustrate how these regulatory hurdles impact production. One major issue is technological mandates, such as the requirement to include NavIC and FM receivers, which add up to USD 30 per device in production costs. Moreover, customs misclassification of products due to a lack of understanding of technology convergence leads to delays and incorrect tariff impositions.

The report calls for greater collaboration between industry stakeholders and policymakers to streamline customs processes and eliminate redundant regulations. It also recommends offering more flexibility within the Production Linked Incentive or PLI scheme, which limits companies to a rigid five-year period for meeting production targets.

Gender Diversity: Untapped Potential in Manufacturing

In addition to regulatory and tariff concerns, the report emphasises the untapped potential of increasing gender diversity in India’s mobile manufacturing workforce. The study found that women’s participation in the industry remains low, and addressing this gender gap could significantly boost productivity and innovation.

Survey data indicates that targeted initiatives to promote gender diversity, such as government-industry collaboration on training programs and curricula alignment, could help attract more women to the sector. The report suggests that reducing the gender gap and fostering a more inclusive work environment would be key to maximising India’s manufacturing potential.