- PMP has seen limited success, causing local mobile phone brands to lose its market share
- A recent IAMAI report suggested focusing on a large scale and high-end manufacturing of phones and incentivising exports
- Despite an increase in the number of manufacturing units, the production capacity per unit had seen a sharp decline when compared to 2014-15 levels
- PMP has failed to attract capital investment, with domestic players preferring to rely on imports
In order to enhance India’s domestic manufacturing capacity and build its export capacity, the Internet and Mobile Association of India (IAMAI) has called for an assessment of the impact of the phased manufacturing program (PMP), which has seen limited success, causing local mobile phone brands to lose their market share, reported Business Standard.
“The twin objectives of the PMP were to reduce India’s import dependency and increase domestic value addition. To this end, PMP relied on an import substitution approach and levied a 10-15 per cent Basic Custom Duty (BCD) on parts/components/sub-assemblies scheduled to be tariffed from 2016-17 to 2018-19. However, the program has achieved limited success,” according to a report titled “Make in India 2.0: Revisiting Mobile Manufacturing,” released on Thursday by the IAMAI.
The report also suggested focusing on a large scale and high-end manufacturing of phones and incentivising exports. However, it made a clear call to revisit the PMP.
PMP – A failed strategy?
“The PMP could not leverage global lead firms to relocate their manufacturing base to India. The program achieved limited success in localising components manufacturing. Consequently, India’s local brands such as Micromax, Intex, Lava, and Karbonn have lost their domestic market share, and are struggling to sustain operations despite the introduction of PMP,” the report said.
The report further noted that despite an increase in the number of manufacturing units, the production capacity per unit had seen a sharp decline when compared to 2014-15 levels.
The smaller operating scale of the existing manufacturing units indicates that PMP has failed to attract capital investment, with domestic players preferring to rely on imports, the report added.
The electronics system design and manufacturing (ESDM) sector is expected to grow at a compounded annual growth rate of 15-19 per cent to reach $123- 150 billion by 2020 in India.
Mobile devices are the largest segment of the ESDM sector in India, accounting for less than a third of the size of the sector, the IAMAI report noted.