Handset makers may invest Rs 6,000 crore for more local inputs

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India could see investments of up to $900 million (about Rs 6,000 crore) in the next two years from leading handset makers and global contract manufacturers that are seeking to increase the local content in their instruments by assembling printed circuit boards (PCBs) in the country.

Image Courtesy: BTVi.in

According to Economic Times, industry insiders say that Chinese handset makers such as Vivo, Oppo and OnePlus, besides Indian phone players including Micromax and Lava, have earmarked higher investments in their domestic operations to avoid any levy on the imports of PCBs, which make up 50% of the cost of manufacturing a mobile phone, and other components. Further investments are also planned by contract manufacturers such as Foxconn and Dixon.

“We’re expecting investments up to $900 million in two years until 2019 by all key players,” said Pankaj Mohindroo, president of the Indian Cellular Association (ICA) that represents all major handset makers in India, including Apple and Samsung.

“About 350 SMT (surface mounting technology) lines are expected to be set up by all key players,” he added.

SMT machines are required for assembling PCBs, which involves heavy investments, said sector experts. An assembly line fixes or populates the PCB with several electronic components that go into making a mobile phone. The process is a far higher level of manufacturing in terms of value, which is why the Indian government wants local and international players operating here to move towards this space.

To this effect, the government is expected to levy basic customs duty (BCD) on assembled PCBs from the upcoming financial year, EThad reported last week. Other mobile phone parts such as camera modules and connectors would also attract higher levies. This comes after an increase in the duty on mobile phones from 10% to 20% within eight months.

India’s No 2 smartphone brand Samsung has been doing PCB assembly since 2006, and a large majority of its ongoing `5,000-crore expansion will be dedicated toward higher level of mobile phone assembly, said a person familiar with the plans.

No 1Xiaomi said that the Indian market was ready for a higher level of component manufacturing and value addition. “If not in India, then where… the volumes are incentive enough,” said Manu Jain, managing director of India operations, referring to the fact that India was the fastest growing smartphone market in the world. He did not comment on specifics.

Rival players such as Micromax, Lava and Oppo have begun laying the groundwork for large-scale production.

“Our first SMT line is already installed in our Baddi plant in Himachal Pradesh, and after its successful running, we will replicate it in all our factories,” said Vikas Jain, co-founder of Micromax Informatics.

Lava International has already earmarked Rs 100 crore in PCB assembly, which is planned to begin this month with 2.5 lakh units that will be expanded to two million units over 2018.

Oppo is expected to begin assembling PCBs in its Noida plant by March this year, a spokesperson said.

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