Can India be a smartphone manufacturing hub?

If you're a phone geek like me, you must have noticed it already. India gets many of the good phones lately. Just to call a couple, Xiaomi and OPPO have both built whole new brands for India with Poco, Realme and Samsung made their super aggressively priced.

Let's explore why the Indian Smartphone industry has become so competitive and if the country can take this recent smartphone boom to the subsequent level and become a real smartphone superpower.

India actually already had a quick moment with home-grown smartphone brands a couple of years ago. Back in 2014, over 2/3rds of the phones within the country were sold by Indian brands like Micromax, Karbonn, Intex, and Lava, same year, Micromax actually managed to outsell Samsung for the primary time and silently became the most important mobile brand in India. 

This explosive domestic success didn't last very long though, as just a year later, Samsung re-claimed the throne, and Chinese brands like Xiaomi, OPPO, and Vivo started entering the market. Turns out, the Indian brands didn't really stand an opportunity against this new onslaught, as their whole strategy was just to shop for ready-made phones from second or third-tier manufacturers in China, stick their logos on them and sell them to customers in India.

Of course, they did not lay against brands like Xiaomi and OPPO, who had an outsized sort of facility, extensive control over their own hardware, also as deep pockets from their successful operations in China. 

When Chinese brands like OPPO entered the market, they initially paid up to $110 per customer purchase, compared to the $3.2 some local brands were paying at the time. that's an insane 30x increase in marketing spending, even if it had been a short-lived one. during a similar vein, Xiaomi didn't spend much on marketing, but had no trouble losing money on phones for years in India to create up its brand and drive competitors out of the market. 

None of the more simple Indian companies could continue with either of these, so it's no wonder that they lost ground and only Micromax occasionally manages to form it to the highest 5. 

In fact, Samsung has recently opened the most important mobile factory within the world by output in India. The world's largest electronics manufacturer has also opened multiple factories here, including ones for Xiaomi and even for apple to assemble some high-end iPhones. These phones, while assembled in India, still use components that are mostly imported.

Instead of Indian companies selling phones made in China, now it's Chinese (and Korean) companies selling phones, and to some extent developed in India. That's still far away from India having its own Samsung or Xiaomi, but it's a big revival of the industry. 

So, let's check out why this revival is occurring.

India has over time become the second-largest smartphone market within the world and is that the only large one that's growing significantly. All other major regions are suffering declines, so India has become crucially important as a market.

India, alongside Vietnam and other South-east-Asian countries, are a logical destination country, India has recently toppled China to become the most important recipient of foreign direct investment within the world. Seeing the increasing attractiveness of India as both a market and a producing hub, the Indian government has implemented these-called Make in India strategy.

Make in India... 

Make in India covers many industries, not just phones. Under the plan, the govt simplified taxation and labor regulations, it encouraged infrastructure development and made it significantly easier for foreign companies to take a position in India. it's also introduced the so-called Phased Manufacturing Programme, which may be a step to encourage phone makers to bring their manufacturing to India. 

India has recently become the second-largest phone manufacturer within the world after only China, there are now over 200 manufacturing plants across the country. The govt planned to start out with simpler components like chargers and batteries and is getting to add increasingly complex components like microphones,  computer circuit boards, and cameras.

Still, 62% of the whole has no success so far, meaning that more complex components are still mostly imported. the primary PCB(printed circuit board) manufacturing plants are already being found out by companies like Vivo, but things are taking longer than expected.

In fact, the govt has set the goal of producing 500 million phones in 2019, of which it actually wants to export 120 million. But, we haven't seen any exporting activity yet. 

Now, the last question is how this smartphone boom will impact Indian companies.

Domestically, foreign companies manufactured materials are in fact better than nothing, but within the future, it cannot be a sustainable strategy. I think that India could be late to develop its own major smartphone brand, this market feels very mature, extremely competitive and very oversaturated already. 

Chipmaker Signalchip is the first Indian company to bring microchips to the market. they're currently specialized in 4G and 5G modems and microchips for base stations, which are the units that beam radio waves for mobile networks around.

Success breeds success, and overall I'm very positive and confident about the outlook of Indian tech companies.