India's mobile phone manufacturing industry still faces problems: lack of skilled workers and incomplete supply chain

India’s dream of becoming a smartphone manufacturing powerhouse is shattering due to a lack of skilled workers and component supply chains, as well as a complex tax system, industry executives said.

Indian Prime Minister Narendra Modi is vigorously promoting the development of manufacturing and has put forward the slogan of "Make in India" to boost the sluggish economy and create millions of jobs. One of the plans that has attracted widespread attention is to make Apple's iPhone "made in India".

But three years later, India still can only assemble mobile phones using imported components .

Although contract manufacturers such as Foxconn and Wistron have established production bases in India, one of the world's fastest-growing smartphone markets, almost all high-end components such as chips and cameras are not produced in India.

Foxconn's plan to build an electronic components factory in Maharashtra, India has come to a halt.

While phones are assembled in India, taxes on imported phones generally limit components made there to earpieces and chargers, which account for about 5 percent of a phone’s cost, according to market research firm Counterpoint.

An executive of a Chinese mobile phone manufacturer said, " Don't think that India is suitable for making mobile phones. I just need to assemble mobile phones there because tariffs are low and I can import components and assemble them in India. "

The executive declined to be named for fear of a disruption to business.

Other mobile phone manufacturers listed the reasons for not making mobile phones in India, including the lack of skilled engineers and supporting component manufacturers. They also said that the tax dispute between India and foreign mobile phone manufacturers such as Nokia also affected their plans to produce mobile phones in India.

Another industry source said India's sales tax also faces challenges, such as a lengthy refund process that delays payments to suppliers.

"To start manufacturing in India, we need government help," said Neeraj Sharma, India head of Chinese chipmaker Spreadtrum Communications. "This is a must because without government help, nothing can be done."

However, India needs more advanced technologies, such as surface mount technology (mounting components directly on circuit boards), to build a supply chain. In addition, companies will not develop technology in India, Sarma said, "to do design work in India, we need to have strong local partners."

The Indian government said it has formulated a phased plan for mobile phone manufacturing, gradually increasing the localization rate each year. Aruna Sundarajan, India's Minister of Telecommunications, told the media, "We will first assemble mobile phones and plan to gradually move up the industrial chain. Many investors have shown interest."

According to the Indian government's "Phase-based Manufacturing Plan", manufacturers will start manufacturing mobile phone chargers and batteries in India from 2016 and start producing high-end components in 2020.

Sundararajan said the government was also working to give investors "a reasonable level of certainty" while dealing with disruption to the industry.

But for phone makers accustomed to predictability in China, India still has work to do, industry executives warn.

A senior executive at a Chinese smartphone maker in India said some Chinese manufacturers were unhappy about labor unrest, including a strike at a factory belonging to Oppo earlier this year.

“Labor laws are equivalent to taxes, and India has done little to build a component ecosystem and logistics. Transportation is still a big problem. No one is investing in the skilled workers needed to make phones,” the executive said.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.