Context-
India’s smartphone exports grew from 1% to 2.5% in a decade.
Background
- At the global level China maintains to dominate the export sector, via exporting 1/2 of the world’s smartphones in 2022.
- However, Vietnam has eaten into its export share regularly over time, taking on South Korea as the second-largest smartphone exporter.
- Both India and Vietnam had less than 1% export share earlier than 2010. By 2022, Vietnam’s share rose to 12%, even as India ranked seventh with a bit over 2.5% export percentage.
- Hong Kong, UAE, the Czech Republic, the U.S. and South Korea are other players in the export market.
India’s function in smartphone exports sector
- Within India, Tamil Nadu leads smartphone exports with nearly 38% of India’s mobiles being exported from Kancheepuram.
- Gautam Buddha Nagar of Uttar Pradesh and Kolar in Karnataka are different districts leading in smartphone exports.
- In UAE and Germany — the sector’s third and fifth biggest phone importers — India’s percentage is developing with 13% and 5% respectively.
Challenges faced through India’s smartphone exports sector
- Global Competition: India competes with established players like China, South Korea, and Taiwan, that have properly-evolved manufacturing ecosystems and brand popularity.
- Supply Chain Constraints: The smartphone production supply chain in India is still evolving, leading to challenges in sourcing additives locally and depending heavily on imports.
- Regulatory Hurdles: Export techniques, taxation guidelines, and regulatory compliance can be complex and time-eating, affecting the convenience of doing business and competitiveness.
- High Domestic Consumption: India keeps to fabricate a significant quantity of smartphones, however, most of it is consumed domestically.
- Exports account for only 25% of India’s smartphone production compared with 63% of China’s production and 95% of Vietnam’s.
- High import price lists: Made in India phones use many high-end parts imported, subject to the high tariffs to protect the local manufacturers, raising overall costs.
- Vietnam and China do not levy price lists above 10% on additives from their “maximum-desired country” trading companions or countries with whom they’ve unfastened-trade agreements.
- Foreign investments: Instead of India, Vietnam has attracted many firms which had been looking to lessen dependency on China.
Government initiative
- The government credited the Production Linked Incentive scheme for foremost smartphone groups shifting their suppliers to India.
- National Policy on Electronics 2019: India set a goal of exporting 600 million cellular phones worth $110 billion by 2025.
- The Indian government decreased import duty on mobile elements together with lenses, battery and lower back covers from 15% to 10%.
- However, it maintains a 20% tax on chargers and circuit forums.
Way Ahead
- India has to fit China and beat Vietnam on unique parameters to draw smartphone producers.
- Lower tariffs on additives is the important thing to India’s targets to achieve the goal of export by 2025.
Source: The Hindu
UPSC Mains Practice Question:
Q.What is the significance of smartphone manufacturing in the Indian economy and how does it contribute to India’s pursuit of self-sufficiency and technological advancement?
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