India to consume mobile phone spares worth $80 b in 5 years

With increase in smartphone usage, India would consume $80 billion worth of total mobile phone components over the next five years, says a latest study released here on Monday.

As per a joint study by IIM Bangalore and market research firm Counterpoint Researchers, ‘India surpassed the US to become the second largest global smartphone market in terms of users in early 2016, and on track to cross half a billion smartphone-users mark within the next five years’.

In this five-year period, close to a billion smartphones, together with almost half-a-billion feature phones that will be sold in India, will consume more than $80 billion worth of components. This offers a huge opportunity just from the domestic demand perspective to manufacture mobile phones in India, and increasingly source components locally, thus, reducing the dependency on imports, said the report.

The contribution of domestically manufactured mobile phones has increased from 14% in 2014, to 67% in  2016 (calendar year). This is further estimated to contributed 96% by 2020.

The report estimates that more than $15 billion worth of components will be sourced locally over the period of five years through 2020, creating over a million direct and indirect jobs in India.

However, 67% of the handsets manufactured in India contributes to just 6% of the ‘true local value addition’ with most of the OEMs still importing Semi-Knocked Down (SKDs) components.

“Out of 50 facilities from original equipment manufacturers (OEMs) to original design manufacturers (ODMs), and electronics manufacturing services (EMS), to component suppliers involved in manufacturing of mobile phones in India, almost three-fourth are Indian manufacturers, followed by Taiwanese at 10%, and Chinese at 10%,” the findings showed.