Even though the mobile PLI scheme was aimed at encouraging local players to become global exporters, Chinese smartphone makers are leading the market when it comes to ‘Made in India’ shipments.
While these shipments grew 16 per cent y-o-y to reach 44 million units, a significant contribution continues to come from Chinese companies, who were excluded from signing up for the mobile PLI scheme for geopolitical reasons, an analysis by Counterpoint Research shows.
Way too ahead
The report illustrated that Chinese smartphone makers, Oppo and Vivo, saw their market share in smartphone shipments increase despite not being PLI beneficiaries. South Korean Samsung was the only PLI beneficiary that increased its market share. Meanwhile, Indian smartphone manufacturers either command negligible market share or lost market share between Q2 CY21 and Q2 CY22.
“The market is currently dominated by Chinese OEMs and all of them have already made significant investments in India in setting up manufacturing capabilities. This they did irrespective of the PLI scheme as their intent was to leverage other benefits like saving on import duty, proximity to market, and increase their commitment in a market like India which is important for them but volatile due to political skirmishes from time to time,” said Faisal Kawoosa, Founder and Chief Analyst at TechArc.
The Centre committed to a slew of subsidies in exchange for which PLI beneficiaries pledged that they will reach a total production of ₹10.5-lakh crore in the next five years with 60 per cent of the total production (₹6.5-lakh crore) targetted for global markets. This is being done with the aim to reduce India’s electronic trade deficit with China.
However, despite benefitting from the first tranche of subsidies from the government, the data from the Counterpoint report show that Samsung is the only player that increased its market share for smartphone exports, from 15.6 per cent in Q2 CY21 to 21.8 per cent in Q2 CY22. On the other hand, while Oppo’s export market share has gone up from 20.2 per cent to 23.9 per cent, Vivo increased its export market share from 13.3 per cent to 14.0 per cent.
Meanwhile, most Indian PLI beneficiaries such as Lava, Micromax, and Optiemus did not command significant market share in this segment at all. Additionally, Dixon saw its market share shrink from 9.1 per cent to 8.3 per cent.
However, the report noted that Lava led the market for feature phone exports at a market share of 22 per cent. Feature phones have the lowest value add, especially as global high revenue markets veer to 4G and 5G telecom networks, necessitating the need for smartphones.
Cheap labour
Peeyush Vaish, Partner and Telecom Sector Leader at Deloitte, explained why the Chinese smartphone makers do not need the Indian PLI scheme to manufacture smartphones even for export.
“If you look at their India demand, they have enough volumes warrant bolstering production for export purposes. Assembly of smartphones is cheaper in India because our labour costs are cheap. Therefore, it is no surprise that they lead the market share,” said Vaish.