India’s manufacturing capability of handsets is expected to increase, making the addressable OEM market worth Rs 10-11 lakh crore by 2025, said a report by KPMG India and HSBC India. The report titled ‘Powering up Electronics manufacturing in India’ examined the advantages that India offers global electronics components manufacturers, specifically in mobile handsets.
“As per KPMG analysis, considering the estimated Rs 14 lakh crore market size for handsets by 2025, the addressable market for OEMs after deducting the branding, after-sales, retailer mark-ups and accessories cost would stand around Rs 10-11 lakh crore,” it said. The addressable market for components manufacturers after deducting the conversions cost, handling charges, margins, etc is estimated at around Rs 6.5 to 7.5 lakh crore, it added.
“By any stretch, this is a large and attractive market and India offers an enviable opportunity for handset and components manufacturers to establish the manufacturing units in India,” the report said. The report noted that India can leverage this “opportune moment” and capitalize on several existing strengths as well the shifting, post COVID-19 geo-political sentiment to become a global leader in the handset, components and electronics manufacturing industry.
Global supply chains are undergoing a radical reconfiguration against the backdrop of the COVID-19 pandemic, rising economic nationalism across the world and significant geopolitical shifts, the report said. It stated that the pandemic has highlighted the risks a single-source supply chain carries, as companies across the world have faced disruptions to the flow of materials from China – the initial epicenter of the pandemic. As multinational companies seek to relocate their global supply chains, emerging economies such as India are increasingly seen as attractive sourcing destinations, it said.
“With India continuously improving its ease of doing business and the launch of several attractive government initiatives such as the Production Linked Incentives (PLI), export incentives, Phased Manufacturing Program (PMP), M-SIPS, Make in India, Digital India, etc. alongside the visionary National Digital Communications Policy (NDCP), FDI in to the country and especially into electronics manufacturing is sure to rise,” it added.
India’s electronics production posted a compounded annual growth rate (CAGR) of around 24 per cent during FY15-20. Also, since FY17, domestic electronic production has exceeded electronic imports, which could be perceived as an indicator of the effectiveness of these supportive policies, the report said.
