Staff Correspondent

India faces key challenge in handset manufacturing

New players will enter the market

Makers will outsource production to EMS vendors

CHENNAI: At present, mobile phone production in India is dominated by the top five global handset vendors: Nokia, Motorola, Samsung, Sony Ericsson and LG. There are only a few domestic brand mobile phone makers with low production volumes who are typically focused on low-end and mid-range handsets. However, technology research and advisory firm Gartner Inc. expects new players — local as well as global — to enter the Indian mobile phone manufacturing market, aided by the global electronics manufacturing services (EMS) providers present in India.

Ganesh Ramamoorthy, Principal Research Analyst, Gartner, said the existing global handset vendors as well as new entrants would outsource its production to EMS vendors to reduce ‘time to market’ and achieve faster penetration for its own branded handsets. This would raise EMS vendors’ share of total mobile phone production in India to nearly 40 per cent by 2011.

Mr. Ramamoorthy said that though domestic mobile phone production now catered mainly to local demand, over the next five years Gartner expected as much as 30 per cent of production to be exported to neighbouring regions that were also demanding low-cost handsets such as Africa, West Asia and other parts of South Asia.

Staying competitive

He cautioned that India faced a key challenge as the country lacked a mature component supply base to support local mobile phone manufacturing.

Limited production

India’s production of vital components for mobile phones was limited because much of it was imported. This might not be viable in the long term, especially with the demand for handsets expected to grow rapidly.

Therefore, establishing a reliable component supply base will be vital for the Indian handset manufacturing industry to stay competitive in both the domestic and export markets, Mr. Ramamoorthy said.