Indian Consumer Electronics 2.0

Boost to consumer electronics in India

The Indian government recently announced schemes to boost the production of consumer electronics in the country after the lockdown. The step comes in the light of Indian electronics market being dominated by foreign firms, and leaves India posed for a potential resurgence as electronics hub.

Crux of the Matter

New Schemes
The government of India announced 3 major schemes to aid home-production of consumer electronics. The total outlay of the schemes would be ₹50,000 crores.

  • Production-Linked Incentive Scheme (PLI): Increased incentive of 4-6% for incremental sales.
  • Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): 25% reimbursement on capital expenditure for electronic goods.
  • Modified Electronics Manufacturing Clusters (EMC 2.0): Aid in developing infrastructure for setting up manufacturing.

Mobile Manufacturing 1.0
Indian companies commanded the market for mobile phones until 2015. In 2014, smartphone sales by Indian companies amounted to 45% of the total sales, which decreased to 10% by 2019. The void was filled by Chinese companies, which saw their contribution to the Indian smartphone market rise from ~9% in 2014 to 54% by 2017.

2018 was a year of revelation as 4 out of 5 top mobile phone companies in India were Chinese. On the contrary, the combined sale of Micromax, Intex, Lava, and Karbonn (MILK), the top 4 Indian mobile phone companies, was 8% of the total market in India.

Added Legal Troubles
Besides the arrival of Chinese companies, Indian companies also witnessed legal trouble from overseas. In 2013, the Swedish company Ericsson sued Micromax for ‘Patent Infringement’, with Lava, Intex and other Indian companies being drawn in similar legalities eventually. Micromax in turn filed case on Ericsson for unfair royalty and excessive demands. Eventually, the case settled in 2018, with Micromax having to pay royalty for each sale to Ericsson. The legal trouble highlighted the economic and legal advantage of large companies over the Indian ones.

What Next For Indian Phone Manufacturers?
Despite increased Chinese sales, there has been a steady increase in the production of phones in India. While the value of phones produced in India was ₹19,000 cr in 2014-15, it increased to ₹90,000 cr in 2016-17.

From just 2 factories, we now have 200 manufacturing units. India’s electronic manufacturing was worth Rs 1,90,366 crore in 2014, today it’s Rs 4,58,000 crore. India’s global share in electronics has risen from 1.3% in 2012 to 3 per cent in 2018. Electronic production has surpassed exports.

Ravi Shankar Prasad, Minister of Communications, Electronics and IT

Due to China’s actions at the border and its opacity in controlling the Coronavirus, there has been an increase in the boycott of Chinese products in India. Combined with the aid of government schemes, one can possibly witness an enhanced Mobile Manufacturing 2.0 in upcoming times.

  • Micromax is an Indian Smartphone manufacturer and consumer electronics company headquartered in Gurugram, Haryana, India. At its peak in 2014, Micromax’s sales in India exceeded those of Samsung. It became the mobile telephone manufacturer to ship the most telephones in one quarter in India. Hugh Jackman was the brand ambassador of Micromax and appeared in a commercial in 2013 for its first flagship smartphones.
  • The Statute of Monopolies (1624) and the British Statute of Anne (1710) are seen as the origins of patent law and copyright respectively, firmly establishing the concept of intellectual property. The first known use of the term intellectual property dates to this time, when a piece published in the Monthly Review in 1769 used the phrase.
  • Make in India, a type of Swadeshi movement, was launched by the Government of India on 25 September 2014 to encourage companies to manufacture their products in India. After the launch, India gave investment commitments worth ₹16.40 lakh crores ($230 billion) and investment inquiries worth of ₹1.5 lakh crores ($21 billion) between September 2014 to February 2016.