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Make in India program attracts US$17 billion in proposals to manufacture electronics, including mobile phones, in India

08 February 2016 Vinita Jakhanwal

The Make in India program launched in September 2014 by the government of India has already attracted US$17 billion worth of proposals for manufacturing electronics in the country within the first year. IHS expects the subsidies and other resources offered under Make in India to provide an attractive investment climate and lower manufacturing costs, thereby providing a boost to domestic manufacturing. The program will particularly benefit the mobile phone manufacturing industry, spurring subsequent investments in other consumer electronics manufacturing in India.

Within the Make in India program, the Modified Special Incentive Package Scheme (M-SIPS) subsidy is offered by the Department of Electronics and Information Technology (DeitY) specifically to attract investment in electronics manufacturing. It provides financial support to prospective companies looking to manufacture electronics in India at one of the 16 electronic manufacturing clusters that are strategically spread across the country and close to trading ports.

The companies that have already responded to this program are domestic and foreign mobile phone manufacturers including Micromax, Lava, Celkon, Samsung and Sony. Each has either invested directly into captive mobile phone manufacturing factories or partnered with EMS/ODMs companies to set up assembly factories in India. For example, Foxconn has set up factories in Chennai, Tamil Nadu and Sricity, Andhra Pradesh, where it is assembling phones for Chinese companies like Xiaomi, Gionee and Oppo, and is likely to do so for Apple as well. IHS believes these mobile phone manufacturers will next utilize the incentives to manufacture other consumer electronics. This is evident from the announcements of Sony's TV manufacturing and Celkon's tablet manufacturing investments in India.

Good incentives, initial investments and successes of the first movers, particularly in improving competitiveness due to lower manufacturing costs, and a growing consumption market for electronics in India will likely push other electronic manufacturers to rethink their business strategy regarding manufacturing in India. But despite the initial successes, challenges remain when doing business in India, such as intrusive market regulations, poor infrastructure, inflexible labor market practices and stiff land acquisition rules. It is important that the government address these issues quickly for the continued success of the Make in India program.

For more information, please visit: https://technology.ihs.com/571016/make-in-india-to-boost-domestic-smartphone-manufacturing.

Vinita Jakhanwal is a senior director for IHS
Posted on 8 February 2016

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