Goutam Das, Senior Associate Editor, Business Today
India's 'Make in India' push has gained steam at least in one sector - mobile phone manufacturing. On Tuesday, domestic telecommunications company Optiemus announced a joint venture with Taiwanese original design manufacturer (ODM) Wistron Corporation to set up a mobile phone plant in Noida.
The plant, which would cater to outsourced manufacturing for companies such as HTC, will come up at a cost of $200 million over the next five years. The first phase of the factory, roughly with a capacity of 18 million devices per annum, will be commissioned by March 2016.
Optiemus and Wistron join a long list of mobile phone makers and manufacturing services providers who are either already manufacturing or have committed to investments in the country over the past one year. The list includes Samsung, Micromax, Lava, Celkon Mobiles, Spice Mobility, Karbonn, Gionee, Xiaomi, OnePlus, Foxconn, and Dixon among others.
Optiemus said it would be a majority holder in the JV and apart from HTC, its anchor client, it was in advanced talks with other global phone makers. Wistron officials said it would bring in global best practices and processes in manufacturing - the company manufactures for BlackBerry.
Mobile phone manufacturing in the Indian context implies assembly and packaging. India is yet to develop the component ecosystem required for 'real' manufacturing. The country doesn't have a fab to make microprocessors, for instance. But assembly is a labour-intensive activity and suits India's jobs creation agenda.
Optiemus said that at full scale, its Noida plant would employ around 15,000. The Ministry of Communications and IT had earlier formed a "fast-track task force" for mobile manufacturing. One of its objectives is to achieve production of 500 million units of mobile handsets by 2019 and employ 1.5 million people.
Several factors are coinciding for this surge of interest. The government's push initially came with the 2015/16 Budget that provided for an excise duty differential between local and imported phones; finished phones imported became more costly.
Many of the imports came from China but since 2011, rising labour costs and currency movements have eroded some of China's cost advantages. Business Today had earlier reported that on China's east coast, starting salaries in the mobile manufacturing industry are equivalent to Rs 25,000 a month. In India, they are Rs 7,000 to Rs 8,000.
And finally, availability of manpower is becoming challenging in the Middle Kingdom. As its economy grew and became more sophisticated and well paying jobs became prevalent, less and less people were ready for manual, low-paying jobs.
India wants to cash in.