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Smartphones, Now The Second-Largest Exported Commodity In India

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With exports hitting $15.3 billion at the end of CY2024, a 46% YoY increase, smartphones have made it to second place in India’s export rankings. What does this mean for the country’s goal of a $300 billion electronics sector by the end of FY25-26?

‘Made-in-India’ smartphones have dramatically transformed the nation’s export landscape, rising from the 167th position in FY2014-15 to the country’s second-largest export commodity. According to a recent report by the ICEA (Indian Cellular & Electronics Association), from April to December 2024, smartphone exports surged to $15.3 billion, a remarkable 46% increase compared to the same period last year.

Citing this performance, which has propelled smartphones to their current rank in India’s exports, Pankaj Mohindroo, the Chairman of ICEA, commented, “This extraordinary turnaround is unlike anything seen in independent India’s manufacturing history. The industry has proven its mettle, scaling up to meet global demand with products that match the highest quality standards.”

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The rise

In 2014-15, India’s mobile phone production only fulfilled 25% of domestic demand. However, the last decade has seen a substantial boost in domestic production, reaching ₹4.1 trillion (US$ 49.27 billion) in FY24, up from US$ 3 billion in FY15. Thanks to numerous government initiatives, India now meets 97% of its own mobile phone demand.

By 2018-19, domestic production and demand were on par, according to IBEF (India Brand Equity Foundation), and since the Production-Linked Incentive (PLI) Scheme’s introduction in 2020, production has surged from US$30 billion to US$49 billion in 2023-24.

Smartphone exports saw a massive 91% jump in 2022-23, placing mobile phones among India’s top five export items, making the country world’s sixth-largest exporter of mobile phones. In 2023-24, exports rose another 42%, reaching US$15.6 billion, making smartphones the country’s fourth-largest export commodity.

To put this in perspective, India has almost reached that figure with three months remaining in this fiscal year.

Government initiatives that drove this rise

One of the most impactful undertakings that boosted India’s smartphone exports is the PLI scheme, launched in April 2020. The scheme has significantly boosted India’s smartphone exports by offering financial incentives based on production levels. This has encouraged companies to increase output and invest in local manufacturing. Major global brands like Dixon Technologies, Foxconn, Apple, and Samsung have been attracted to the scheme, facilitating technology transfer to local workforces. Companies are eligible for incentives one year after meeting their production targets.

To date, the government has disbursed approximately ₹25 billion (US$300.41 million) under the scheme. Of this, ₹5 billion (US$60.08 million) was awarded to Samsung for meeting targets in its first year, while ₹20 billion (US$240.33 million) was allocated to three contract manufacturers of Apple and Dixon.

Another important initiative is the Phased Manufacturing Programme (PMP), introduced way back in May 2017. This scheme was designed to boost the domestic production of mobile phones in India by providing a structured approach to gradually increase tariffs, to support local industries. The PMP has helped to create a robust local manufacturing ecosystem for mobile devices.

Additionally, the ‘Make-in-India’ initiative, which began in 2014, has been pivotal in the rise of domestic mobile phone manufacturing. The initiative has notably contributed to the increase in the shipments of domestically produced mobile phones, which surpassed 2 billion units between 2014 and 2022.

According to the research firm Counterpoint’s report, mobile phone shipments from India experienced a compound annual growth rate (CAGR) of 23% during this period.

India’s global competitiveness and China, Vietnam

India is increasingly seen as a key alternative to China, amid recent geopolitical tensions, for companies seeking to diversify their supply chains and switch its reliance on a single market. The ‘China+1’ trend has proven advantageous for India, particularly in the mobile phone export sector.

In 2023-24, China and Vietnam saw export declines of 2.78% and 17.6%, respectively, while India’s exports grew by over 40%. According to the International Trade Centre, China’s mobile phone exports dropped by US$3.8 billion, and Vietnam’s fell by US$ 5.6 billion. In contrast, India gained US$4.5 billion in exports, capturing nearly half of the combined decline from both China and Vietnam.

Source: IBEF

As the government eyes ambitious growth in its electronics sector, which includes a goal of US$300 billion in electronics production by 2025-26, India is engaging more actively in global value chains (GVCs). To support this growth, the Union Budget 2024-25 has introduced measures to lower the basic customs duty on mobile phones, PCBs, and chargers from 20% to 15%. Additionally, exempting critical minerals and components from tariffs is expected to strengthen local manufacturing and better align with industry demands.

Is India’s low manufacturing cost its secret weapon?

Cost-efficient labour is another significant advantage for India, reducing production costs and enabling manufacturers to offer competitive prices. This, coupled with government support, has attracted both domestic and foreign investments. Additionally, the sector has created approximately 500,000 jobs, with projections for an additional 150,000–200,000 jobs by the end of FY25, further boosting India’s economic growth.

Domestic demand: another advantage

According to IBEF, India’s mobile phone manufacturing is also supported by strong domestic demand, driven by a large consumer base and rising disposable incomes. As per ICEA’s data, domestic demand has surged from US$12 billion in FY14 to US$36 billion in FY24, growing at a CAGR of 13%. This increase has spurred manufacturers to ramp up production to meet both local and international needs.

Source: IBEF

Challenges that persist

However, India faces hurdles in electronics exports (not only smartphones) due to reliance on GVCs and competition from established leaders like China and Vietnam. Electronics made up just 4.7% of India’s total exports in 2022, compared to 27% for China and 40% for Vietnam. Thus, there is significant potential for growth.

What lies ahead?

By 2025-26, mobile phone manufacturing is expected to contribute 40% to the $300 billion goal. Incidentally, the FY24 saw India’s electronic imports dipping by 7%. With over 200 dedicated manufacturing facilities for smartphone manufacturing, however, there is more to be done. India must develop a strong domestic ecosystem, enhance skills, and invest in technology, enabling local companies to better integrate into global supply chains and compete effectively.

“Let us not get comfortable. While $20 billion is within reach this year, it’s still a modest step in our journey to significantly increase our share in the global market. The next challenge? To ensure India doesn’t just compete, but leads. The industry is ready to fire from all cylinders,” noted Mohindroo.  

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Shubha Mitra
Shubha Mitra
Shubha is a journalist at EFY. She is keenly interested in India's evolving electronics ecosystem. Her focus revolves around government policies, legislation, and public-private partnerships related to the industry.

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