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Monday, 02 Feb 2015
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Mobile manufacturing in India: Uttar Pradesh taking the lead

Spice Group recently announced plans to invest Rs 500 crore to set up a mobile manufacturing unit in Uttar Pradesh. The announcement coincided with the inauguration of Samsung's Rs 517 crore expansion of its Noida plant.


Mobile manufacturing in India: Uttar Pradesh taking the lead | ProjectsToday


The Uttar Pradesh government is facilitating infrastructure, ecosystem and incentives under various schemes to promote electronics manufacturing in the state. UP is among six states that have come up with their own Electronic System Design & Manufacturing policy.


Lava International, another mobile handset company, has also committed to invest Rs 600 crore over a period of three years for setting up a manufacturing unit along the Yamuna Expressway. Till now the company was outsourcing its manufacturing to China.


Indian Cellular Association (ICA), the apex body of the mobile industry, and the government of Uttar Pradesh have also signed a Memorandum of Understanding (MoU), with the objective of encouraging new investment of around Rs 1,000 crore to establish Electronics Manufacturing Clusters (EMCs) in the state.


ICA has also unveiled ‘Vision 2020’ to make UP a global hub for Electronics System Design and Hardware Manufacturing (ESDM). According to the vision, it is expected that investments amounting to Rs 72,000 crore could be grasped in UP by the ESDM sector, by 2020.


Other than Uttar Pradesh, Uttarakhand has also been successful in investing in the mobile manufacturing sector. Smartphone maker, Maxx Mobilink, plans to start production of mobile handsets at its Haridwar plant, beginning with assembling devices from April. Initially, Maxx will invest around Rs six crore in setting up an R&D lab, which will take care of device testing and software innovation.


Also, Micromax, India's second largest mobile devices company, has started manufacturing handsets at its Rudraprayag facility in Uttarakhand since April 2014.


All these developments come at a time when the mobile phone industry in India is facing rising demands on one hand and declining production on other.


Domestic mobile phone manufacturing and exports have taken a hit recently mainly due to the closure of Nokia's Chennai factory towards the end of 2014. Mobile handset production dropped a little more than half from 130 million in the calender year 2014 to 58 million units in 2014. This, in return, pulled down the mobile phone exports considerably. Mobile phone exports dropped sharply from 72.5 million in 2013 to 14 million in 2014.


ICA has projected that the situation is likely to worsen in the absence of corrective measures. India's exports of mobile handsets are expected to hit zero in 2015, and domestic production is expected to fall to 46 million. Concerns have also been expressed that manufacturing is moving out of the country to Vietnam, due to an investor-friendly and predictable regulatory environment. In this scenario, these recent announcements by mobile manufactures are a silver lining for India’s mobile phone manufacturing.


To boost the country's presence in the field of electronics manufacturing, ICA has also asked the Central Government to take corrective steps. A “Fast Track Task Force” was recently set up by the Department of Electronics and Information Technology (DeitY) force to rejuvenate the nation’s mobile phone manufacturing ecosystem with a vision to achieving production of 500 million units of mobile handsets by 2019.


The Department of Telecom is also believed to have sought a 15 year tax holiday on domestic production of handsets and a lower uniform VAT rate among other relaxations.


Quote of the week:

  Akhilesh Yadav, Chief Minister of Uttar Pradesh
"We want to make the state a mobile manufacturing hub"

--Akhilesh Yadav, Chief Minister of Uttar Pradesh



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