Indian handset market records 350 million shipments in 2017

The mobile handset market has recorded over 350 million shipments this year as against 280 million in 2016, according to an Assocham-KPMG study.

Smartphones have gained immense popularity in India in the last four years and constituted 43% of the total handset shipments in 2016, the study said.

Robust growth of the handset market coupled with enhanced connectivity of telecom services have been pivotal in the growth of various industries such as retail, manufacturing, IT, e-commerce, stated the study titled ‘Accelerating growth and ease of doing businesses.’

Indian handset exports also flourished from 2008 to 2012 and went up to Rs 12,000 crore, but declined almost 30% in the two subsequent years before reversing the downward trend.

The downfall of handset manufacturing industry became a major area of concern for the government, said the study.

In order to revive the industry, it is imperative to boost handset manufacturing in India. The FTTF, set up in 2014, has a target of increasing count of handsets manufactured in India to 500 million and handset exports to 120 million by 2020.

‘Make in India’, ‘Skill India’ and other initiatives by the government played a pivotal role in achieving an 85% growth in manufacturing of handsets to Rs 54,000 crore in the year 2015-16 over the previous year. It further grew to Rs 90,000 crore in 2016-17.

The industry is of the view that the government may increase the incentive under Merchandise Exports from India Scheme (MEIS) and introduce new incentives such as freight equalisation subsidy and enhance duty draw back to 3% to attract more players in the market.

Countries such as Vietnam and China offer significant incentives by way of direct tax holidays which provide a very cost-effective platform for handset manufacturers to set up production facilities. Vietnam provides tax exemptions to players for the first four years of revenue generation and levies only 10% tax for the next 11 years, which may be extended to 26 years on approval of the Vietnamese prime minister.

With the primary objective of making the handset manufacturing market favourable for existing players and attracting new players, the government may consider introducing reforms with regard to tax exemptions, favourable rates and incentives.

A wider penetration of feature phones and smart phones would facilitate seamless application of upcoming technologies such as 5G, machine-to-machine, Internet of Things (IoT), etc, and also enable the government in achieving targets that it set under the flagship ‘Digital India’ initiative, according to the study.