India presents attractive opportunity for mobile phone manufacturing: HMD Global

With companies looking at a "China-plus one" strategy in wake of the COVID-19 pandemic, India presents an "attractive" opportunity as a manufacturing destination with availability of skilled labour force and young consumer base, a senior HMD Global executive said on Monday.

HMD Global sells mobile phones under Nokia brand.

"There is an ambition of making India a global hub for mobile devices specifically, and what COVID-19 has done is that has kind of accelerated this process...COVID-19 has driven companies to follow the China-plus one strategy when it comes to manufacturing and supply chain," HMD Global Vice President – Corporate Business Development Ajey Mehta said at the Horasis India Meeting.

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"Added to that is India's low per capita income and the skilled labour that we have here. We have the demographic dividend of a young consumer base...so it is really attractive for companies to come in set up," he added.

The event was co-hosted by industry body CII and live-streamed in view of the COVID-19 pandemic.

HMD Global is working with multiple ODMs (original design manufacturers) to manufacture its devices in India. The company, in the past, has said all the phones it sells in India (apart from Nokia 9 PureView and Nokia 8 Sirocco that are imported) are locally manufactured.

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Mehta noted that smartphone usage has gone up by almost two hours per day in India, and data consumption has risen by 30 per cent as people work and study from home.

He added that 5G will bring in more growth opportunities in the Indian market.

"So that's going to demand more and more smartphones, and only accelerates the requirement to have smartphones here in India," he said, adding that the government has taken a number of steps to push mobile phone manufacturing in India.

Asked on collaboration with countries like Vietnam, which is among major manufacturing hubs apart from China, for mobile manufacturing, Mehta said it is impossible to develop products in isolation from other countries for any industry.

"So there needs to be deep collaboration with countries in the supply chain, there needs to be a global supply chain system to deliver products. So even if you're manufacturing in any one place, you have to rely on other places for the manufacturing," he said.

The government has announced ₹50,000-crore incentive schemes for attracting global mobile device makers and boosting local companies for electronics manufacturing.

A recent report by ICEA-EY had outlined that while India appears to have all necessary ingredients to encourage mobile manufacturing at scale and boost exports from the country, what seems to be missing is the policy support to attract lead firms, incentivise production and unveil measures that provide cost competitiveness to industry or help offset the disabilities suffered by Indian firms vis-a-vis Vietnam and China.

The report estimated that India suffers from various disabilities like high cost of power and tax.

This renders India almost 10 per cent and 20 per cent less competitive than Vietnam and China, respectively, it had noted and suggested that India must address these disability issues in the long run.

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