CRISIL, Telecom News, ET Telecom
NEW DELHI: Mobile phone production in India is expected to grow by 22%-26% from FY22-24 to Rs 4-4.5 lakh crore (in value) as the country’s dependence on Imports continue to decline, rating agency CRISIL said in a report on Tuesday.
“After registering a CAGR of 33% between fiscal 2016 and 2021, domestic mobile production is estimated to have increased by 24-26% in fiscal 2022. Despite the continued shortage of chips, three of the global manufacturers have achieved PLI production targets during the fiscal year,” says CRSIL.
India’s mobile phone exports have shrunk by around 33% in FY 2022, and reliance on China has also dropped significantly, CRISIL said. In contrast, during the same period, the country’s exports surged by 56%, which is expected to increase further to reach Rs 1.0-1.2 lakh crore in fiscal 2023 and 2024.
With increasing domestic production, CRISIL said India has become largely self-sufficient on the consumption front. “In FY 2022, the country saw a 15-20% increase in mobile consumption to ~Rs 2.5 lakh crore…We expect the momentum to continue in this FY and the FY2024, increasing consumption to Rs 3.5-4.0 lakh crore by FY2024.”
The report adds that India’s mobile phone production has “jumped” after the Production Linked Incentive Scheme (PLI) and Progressive Manufacturing Scheme (PMP), while helping the country reduce its dependence on imports from China.
The Rs 41,000 crore handset PLI scheme involves incentives in the form of investment-based cash payments and targeted production increases. The program offers graduated incentives in the form of cash back at 6% of incremental sales of goods for the first two years each, 5% for the third and fourth years, and 4% for the fifth year.
However, with the increase in production, imports of electronic components essential for mobile assembly/manufacturing also increased by 27% year-on-year, CRISIL mentions in the report. CRISIL said that in the fiscal years 2017-2022, smartphone sales in India increased from around 113 million to 159-161 million, while featurephone shipments fell to 88-90 million from around 140 million in during the period. He attributed the drop to a “threefold increase” in 4G subscribers.
“Furthermore, the share of 5G smartphones in overall handset sales, which was low at 15-20% in fiscal year 2022, is only expected to increase significantly at the end of fiscal year 2023 due to issues accessibility,” said CRISIL. Smartphone market trackers have predicted that the Indian smartphone market could grow by 5-10% annually in 2022, while the entry-level segment is expected to decline sharply as users move to higher segments.