Editorial: Game-changing surge in mobile phone exports

The larger question is whether India can go beyond being a destination for smartphone assembly and become a true global manufacturing giant

The phenomenal growth in the export of mobile phones from India — touching a record Rs 2 lakh crore in the financial year 2024-25 — is a big game changer, especially against the backdrop of geopolitical tensions with China, a global leader in this sector. The growth represents a 55% increase compared with the Rs 1.29 lakh crore worth of exports in the previous fiscal year. Apple’s iPhone contributed significantly, with an estimated Rs 1.5 lakh crore in exports. Smartphones have become one of India’s top exported goods, surpassing traditional leaders like petroleum products and diamonds. It has been a fairly successful and creditable journey for India, which is now among the top three smartphone exporting countries globally. The feat can be largely attributed to the Production Linked Incentive (PLI) scheme unveiled by the Centre in 2020. The scheme, aimed at inviting the global supply chains to expand their capacity, provides incentives to these players. The success of the scheme lies in the fact that it has managed to draw in foreign investments and placed India among the key players in the global electronics value chains, such as China and Vietnam. The goals of keeping up the momentum and taking a big step forward from being just an assembly shop are facing new challenges. The mobile phone exports clocked more than $3.09 billion last month, an increase of 74 per cent over the same month last year. Today, 99 per cent of the phones that India consumes are assembled in the country.

The larger question is whether India can go beyond being a destination for smartphone assembly and become a true global manufacturing giant. The present growth is happening on the back of assembling rather than genuine manufacturing within the country. One key deficiency of the PLI scheme is that the subsidy is paid only for finishing the phone in India, not on how much value added by manufacturing in India. It turns out that very little apart from assembly is done in India, though manufacturers claim they intend to do more in future. There is a need to address the fundamental concerns of the manufacturing ecosystem — lack of infrastructure and an inadequately skilled workforce. While China is still the top exporter of mobile phones, India has been able to bridge the gap steadily. Mobile phone exports from China dropped from $136.3 billion in FY23 to $132.5 billion in FY24. Similarly, Vietnam witnessed a drop from $31.9 billion in FY23 to $26.27 billion in FY24. This is a big win for India, as per experts. For instance, India has become the second base for Apple’s iPhone manufacturing after China. Its three key vendors in India are Foxconn, Pegatron and Wistron. They set up factories in India after the PLI scheme was launched. As a result, the production and exports of Apple from India have gone up rapidly in the last few years.

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