Current State of Indian Mobile Manufacturing and its Response to Changes

In an interaction with Thiruamuthan, Correspondent, Industry Outlook, Sanjeev Agarwal, Chief Manufacturing Officer at Lava International, discusses the rapid growth of India's mobile manufacturing industry, its response to recent changes, and emerging trends. He highlights profitability strategies, the potential of foldable displays, supply chain resilience, the rise of wearables, and sustainability in smartphone manufacturing. Sanjeev is a seasoned professional with 33 years of experience in operations and manufacturing. He is a Six Sigma Black Belt and has won several accolades in his career. He was the first in the country to lead a Greenfield project for electronic memory and semiconductor wafer assembly.

What is your perspective on the current state of the Indian mobile manufacturing industry, and how do you see the industry's response to recent changes and emerging trends? 

The current state of the Indian mobile manufacturing industry is highly favorable, characterized by significant growth and a promising future. The fact that India has emerged as the world's second-largest producer of mobile phones speaks a lot about the rapidly growing electronics manufacturing base of the country. 

In the last decade, from 2014 up to 2024, India has been able to establish the status of being the second-largest producer of mobile phones globally. The country has drastically brought down import dependence from 78% in 2014 to 3% in 2024 as per industry reports. This shift is concomitant with the robust growth of the domestic manufacturing ecosystem. 

The industry has touched new production levels in Q1 2024, smartphone shipments alone were up by 8% YoY in terms of volume and 18% in terms of value. In addition, 5G smartphone penetration has been on a positive curve, highlighting the strong pace of uptake for advanced technologies in India. However, India is a diverse country where consumption patterns change with every demography. While there is appetite amongst the consumers it is the golden time for telecom manufacturers to develop products that are tuned to the lifestyle and requirements of the people. The share of foreign players is high and offers great competition to Indian brands which should be addressed as a fertile ground to explore and expand. 

Efforts are being undertaken to localize the components further, which will drive the import dependence down and fortify the domestic supply chain. Companies like Lava are posting exceptional top-line growth, with business doubling in the past year, along with a strong increase in the international footprint. 

In today's dynamic market landscape, maintaining profitability and operational efficiency is major. Could you elaborate on strategies that can be effective for managing profitability and ensuring operational efficiency, especially in light of evolving market trends? 

One has to be futuristic in devising the strategy for a business. As a technology brand we at Lava invested in the backbone of innovations by setting up internal R&D, design, and manufacturing plants. These develop insight into consumer needs and enable product offerings that are tailored to one's daily lifestyle. Investments in state-of-the-art technologies ensure the products remain competitive and are best-in-segment in the category. These include implementations in 5G, pragmatic designs, improved battery life, and enhanced user interface. 

Local suppliers for components build an ecosystem of doing business that reduces the dependency on imports, strengthens the manufacturing base in India, and reduces the cost of production which enables them to offer better value to consumers. Product Quality is key at Lava therefore optimizing supply chains and production processes, making use of industry promotion zones, and pursuing value-based pricing are some of the parameters taken into consideration for cost optimization. Operational efficiency can be achieved through streamlined processes, lean manufacturing, advanced technologies, and strict inventory controls. Additionally, creating employment opportunities and investing in workforce training will support sustained growth and competitiveness in the rapidly evolving market.  

Currently, Foldable displays are a significant innovation in mobile technology. How do industries see the integration of foldable displays shaping the future of mobile devices, and what challenges and opportunities does this technology present to manufacturers? 

Currently, foldable displays find utility in flagship devices due to high costs and target the tech enthusiast and high-end consumer. However, with increasing technology at a low cost, it is expected that foldable displays will find their way into mid-segment devices, a practice likely to cover a wide market sector based on consumers. 

Foldable displays enable a more immersive and versatile user experience, thus driving consumer interest and demand. The first unit costs for foldable displays are high, restricting their use within premium devices and making price reduction challenging. Therefore, there are both pros and cons but from a long-term view integration of foldable displays into devices needs sophisticated manufacturing and a robust supply chain which can be challenging. 

Supply chain disruptions, particularly those affecting the availability of crucial components like semiconductors, are posing significant challenges to the smartphone market. How is the industry responding to these disruptions and mitigating their impacts on production? 

Supply chain disturbances, especially in the supply of key components such as semiconductors, had been the smartphone market's major issue before; at present, however, they are no longer a major concern, as it has successfully addressed this issue and expanded by leaps and bounds in the past few years. To make the supply chain more resilient and self-reliant with minimum disruption in the future, the Government of India and the industry are working proactively for the localization of semiconductor manufacturing in the country to reduce dependency on global semiconductor supplies. This will secure more stable and safer production capacity for the future. 

How are smartphone manufacturers capitalizing on the rising demand for wearables and wireless earbuds to broaden their product range and enhance user satisfaction? 

In the Indian market, the wearables segment reported a 37.2% growth in Q2 2023 and a 53% growth in the first half of 2023. Smartwatches nearly doubled in shipments during Q2 2023, while earwear continues to lead the market. A variety of factors have played a role in the popularity from lifestyle changes to the proliferation of social media into smaller markets to the declining average selling prices (ASPs) in the category, which is making smartwatches more accessible. The rapid demand for smartwatches led to quality deterioration in the budget category. 

At Lava through our research findings, we identified the market gaps, especially in the affordable category. Accuracy and quality were missing where product life was limited and warranty was negligible. We focussed on redefining premiumization with Prowatch in the smartwatch category. At competitive prices (starting INR 1999) we introduced models with premium features like Corning Gorilla Glass and AMOLED displays.

How are smartphone companies incorporating eco-friendly materials and recyclability into their products to meet the increasing emphasis on sustainability? 

Using materials in the design of products that do not restrict the products themselves and the materials being recyclable are some of the ways of keeping pollution under check. We are a responsible brand and we ensure all the component materials and end products are as per eco-friendly standards. Educating consumers on proper ways of discarding end-of-life products and ease of recycling ensures a refined approach when discarding devices, including take-back programs and liaising with recycling organizations. From these practices, Lava is taking a sustainable approach to educating consumers while protecting the environment.