India, which has now become the most populous country in the world with a population exceeding 1.4 billion, is also reaching new heights in smartphone manufacturing. People between the ages of 15-29 make up a quarter of the population, and similarly, the 0-14 age group also accounts for a quarter of the population.
This demographic advantage provides India with an opportunity to emerge as a strong market for tech products. This growth, particularly among the youth who are the primary demand drivers for electronics, is significant.
For this reason, India’s electronics sector is growing massively through several government initiatives. In January 2022, the government set a target of $300 billion in electronics production by 2025-26, with a special focus on smartphone exports. As a result, India has now emerged as the second-largest mobile phone manufacturer globally, with over 200 manufacturing facilities established in the country.
India’s Smartphone Manufacturing Market
In 2014-15, India’s domestic mobile phone production met only 25% of the domestic demand. However, in the past decade, India’s mobile phone manufacturing has increased significantly, and by 2023-24, this figure has reached ₹4.1 lakh crore (49.27 billion USD), compared to only 3 billion USD in 2015.
Several key government initiatives, such as the Production-Linked Incentive (PLI) scheme and the Make in India program, have driven this growth. These initiatives have helped India meet 97% of its domestic mobile phone demand.
In 2018-19, domestic production and demand were on par, and after the implementation of the PLI scheme in 2020, domestic production has grown consistently. By 2023-24, domestic production increased from 30 billion USD to 49 billion USD. Additionally, mobile phone exports saw a 91% growth in 2022-23, making smartphones one of India’s top five export products. In 2023-24, India’s smartphone exports grew by 42%, rising from 11.1 billion USD to 15.6 billion USD.
Key Reasons for Smartphone Manufacturing Growth
Government Initiatives:
- Production-Linked Incentive (PLI) Scheme: Launched in April 2020, this scheme has played a crucial role in boosting mobile phone manufacturing in India. Companies receive financial incentives based on their production levels, encouraging them to invest in local facilities and increase production.
- Phased Manufacturing Program (PMP): Launched in 2017, this program aimed to increase domestic production of mobile phones and create a robust local manufacturing ecosystem.
- Make in India: This initiative, launched in 2014, led to a tremendous increase in shipments of mobile phones manufactured in India. According to global research firm Counterpoint, shipments of mobile phones from India grew at an annual rate (CAGR) of 23% from 2014 to 2022.
China+1 Strategy: Due to supply chain issues in countries like China and Vietnam, as well as global geopolitical tensions, India has emerged as a major alternative. In 2023-24, India’s mobile phone exports grew by over 40%, while exports from China and Vietnam declined.
Domestic Demand: The rising domestic demand in India has also boosted mobile phone manufacturing. India’s domestic mobile phone market was worth 12 billion USD in 2014-15 and grew to 36 billion USD by 2023-24, reflecting a 13% CAGR.
Manufacturing Costs: India’s low labor costs have boosted smartphone manufacturing, enabling companies to offer products at more affordable prices. Government initiatives like the PLI scheme have further accelerated production growth.
Challenges: India faces stiff competition from countries like China and Vietnam, which are already global electronics exporters. Additionally, India needs to improve several skills and technical capabilities to establish a strong position in global value chains (GVCs).
The Path Ahead: The government has set a target of $300 billion in electronics production by 2025-26, with mobile phone manufacturing expected to account for 40% of this. India’s smartphone exports are consistently growing, which will help establish the country as a global manufacturing hub.
India’s smartphone manufacturing sector is expanding rapidly and strengthening its position in the global market. Due to government initiatives, domestic demand, and the China+1 strategy, India is emerging as a key player in global smartphone production and exports.
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