India’s domestic production and exports of smartphones have been increasing steadily, with significant changes achieved, especially since the launch of the Production Linked Incentive (PLI) scheme in 2020. This led to an increase in the ratio of exports to production, with exports inching above 31 per cent of the total output of smartphones in India in FY24.
According to the Economic Survey tabled in the parliament, India also became the world’s sixth-largest smartphone exporter in 2022, from the 23rd largest smartphone exporter in 2014.
“The FY20 marked the first-time domestic production exceeded domestic demand, and smartphones became one of India’s top export categories,” the Survey read adding that exports now provide the primary stimulus for the growth of the sector.
A 42.2 per cent increase in exports in FY24 (on a year-on-year basis) also enabled smartphones to rank among India’s top five export items considered at six-digit harmonised system (HS) product categories, it said.
“The government’s PLI scheme, including tax breaks and subsidies, plays a significant role in attracting companies. The rise in India’s domestic smartphone demand is also a key factor in companies’ decisions to invest there,” it noted. For instance, Apple assembled $14 billion worth of iPhones in India during FY24, constituting 14 per cent of its global iPhone production. Foxconn has started production of Apple mobile phones in Karnataka and Tamil Nadu, the Survey highlighted.
PLI boost
While India may not be an immediate beneficiary of the trade diversion from China, it has witnessed a substantial increase in its electronic exports over time. The implementation of the PLI scheme has been a key driver of this growth, the Survey added. For instance, India’s electronic exports to the US have transitioned from a trade deficit of $0.6 billion in FY17 to a trade surplus of $8.7 billion in FY24, underscoring a significant increase in value addition.
The survey cited a study by Centre for Development Studies which shows that there has been a significant increase in domestic value addition (DVA), employment, wages and salaries in the mobile manufacturing segment since FY17. It also added that the success of UPI has been enhanced by the expansion of smartphone usage in India, with more than 116.5 crore smartphone subscribers as of March 31, 2024. The value of transactions conducted on the UPI platform has increased multifold from ₹0.07 lakh crore in FY17 to ₹200 lakh crore in FY24.