In FY 19, India produced around 29 crore units of mobile phones, which comes to an investment of around Rs 2,780 crores, at 2017 prices. These investment figures turn out to be much lower than those reported in popular press. Original Equipment Manufacturers and Electronic Manufacturing Service firms dominate the Indian manufacturing scene. Analysis of the five-digit ASI data for 2016-17 & 2017-18 makes it apparent that the impetus towards domestic assembly of mobile phones through various policy measures has made a positive impact on the growth of investments particularly in plant & machinery assets. As a result, the direct employment generated per unit fixed asset has decreased in 2017-18. Value addition for a majority of the firms at the five-digit level was less than ten per cent in 2017-18. Electronics import under ITA-1 is another reason for such low value addition in the country. Ratio of imported vis-a-vis indigenous raw materials clearly proves the reliance of producers on imported inputs. India has the potential to become a major mobile manufacturing hub if existing policies encourage global brands to co-locate their supply systems; and, a policy to improve local capabilities by creating domestic champions in manufacturing and R&D is adopted.
About the Speaker:
Dr. Chidambaran G Iyer is an associate professor at the Center for Development Studies, Trivandrum. He holds a PhD from IGIDR, Mumbai and B.Tech in Chemical Engineering from Babasaheb Ambedkar Technological University, Maharashtra. His areas of specialisation include Innovation and Technology; Industry and Trade. His research is published across renowned journals like EPW, Indian Economic Review and The Singapore Economic Review. Dr. Chidambaran Iyer’s policy analysis has appeared in media like The Hindu and The Financial Express. He was also nominated by the Government of India, to attend the Second Meeting of the Bank of Sweden Prize Winners in Economics, held at Lindau, Germany in 2006.