HIGHLIGHTS
- China is the world's top manufacturer and consumer of smartphones.
- Major brands have enrolled in the Indian government's incentive scheme.
- According to reports, Oppo and Vivo have began talks with Lava.
Three of China's major smartphone companies have begun talks with Indian manufacturers about manufacturing phones in India for worldwide export, a significant step toward establishing the nation as an electronics manufacturing powerhouse.
According to persons familiar with the situation, Xiaomi, Oppo, and Vivo are in negotiations with Indian contract phonemakers, trying to take advantage of monetary incentives offered to domestic manufacturers. If they proceed, the aim is for Lava International and Dixon Technologies to construct the phones and begin exporting from their factory as soon as this year, they added, declining to be cited on delicate discussions.
A cooperation of this magnitude would be a watershed moment in an industry increasingly dominated by Chinese businesses. China is the world's top consumer and producer of smartphones, but Xiaomi and its competitors are searching for methods to grow abroad as their home market reaches saturation. According to the sources, Oppo and Vivo have began talks with Lava, while Xiaomi is wooing Dixon.
Both groups are interested in government monetary incentives tied to manufacturing capacity, as part of a scheme aimed at making India more competitive as an electronics manufacturer. According to one source, Chinese executives are anticipated to begin visiting Lava and Dixon manufacturing as soon as Covid travel restrictions are lifted.
The government has long encouraged foreign manufacturers to increase exports in exchange for access to India, the world's fastest-growing smartphone market. Following a severe trade war with the US and pandemic-induced shipping bottlenecks, firms throughout the world are looking for methods to minimise their reliance on a China-centric supply chain.
India, along with Southeast Asia, is gaining traction as a viable option.
"India is deliberately increasing electronics manufacturing by taking advantage of the technological cold war between the United States and China, and now China and Taiwan," said Priya Joseph, a policy analyst at researcher Counterpoint. "After convincing phone manufacturers to manufacture in India for the domestic market, the government is laying the groundwork for the next level of competition in phone exports."
Since the government launched the Production-Linked Incentive, or PLI, scheme in 2020, India's mobile exports have surged. According to the India Cellular & Electronics Association, mobile exports are likely to exceed 450 billion rupees ($5.9 billion) in the fiscal year ending March, a 30-fold increase in five years.
"We anticipate additional 10-fold increase by 2026, riding on the fundamental pillars of Apple and Samsung's global value chain ecosystem, as well as significant domestic enterprises like as Lava," said Pankaj Mohindroo, the association's chairman. "By 2026, India's exports would total over $60 billion (approximately Rs. 458,628 crore)."
Since it was announced in mid-2020, several large names have signed on for the government incentives scheme, which was envisioned at the time as helping to produce $150 billion (approximately Rs. 11,18,080 crore) in mobile phone manufacture over five to six years.
Apple's key suppliers, Foxconn, Wistron, and Pegatron, as well as Lava and Dixon, were among the first to commit. Since then, the government has expanded such incentive programmes to a wide range of devices, from laptop computers to semiconductors.
While Delhi has prohibited Chinese applications and services ranging from TikTok to gaming, the administration welcomes foreign producers who can help them achieve their long-term goals.
Xiaomi, Oppo, and Vivo have all began to move capacity to India in recent years. As a result, the country has risen to become the world's second-largest maker and assembler of mobile devices by volume. According to Amitabh Kant, chief executive officer of the government's think tank, Niti Aayog, a couple hundred manufacturers now make both basic feature phones and smartphones, up from just two in 2014.
The majority of these phones remain in the sub-Rs. 10,000 pricing range. Some of the country's top contract phone manufacturers are already exporting smartphones built in India. Lava, for example, exports to the United States and Africa, whereas Dixon manufactures Motorola phones for the American market.
