After mobiles, LED & LCD products may take the phased manufacturing routehttps://indianexpress.com/article/business/after-mobiles-led-lcd-products-may-take-the-phased-manufacturing-route-5609444/

After mobiles, LED & LCD products may take the phased manufacturing route

According to senior government officials, the PMP will be on the lines of the plan implemented to promote indigenous manufacturing of cellular mobile handsets, its sub-assemblies and components.

phased manufacturing programme, LED products, LED TV, LCD television sets, mobile handsets, mobile handsets manufacturing, TV unit manufacturing, tech news
As per a report prepared by IT ministry on “India’s trillion-dollar digital opportunity”, domestic mobile handset manufacturing output increased from 60 million units in 2014-15 to 225 million in 2017-18.

An underwhelming move towards complete local manufacturing of mobile phones notwithstanding, the Ministry of Electronics and Information Technology is studying the possibility of introducing a phased manufacturing programme (PMP) for items such as LED products, LED and LCD television sets and set-top boxes.

According to senior government officials, the PMP will be on the lines of the plan implemented to promote indigenous manufacturing of cellular mobile handsets, its sub-assemblies and components.

“The intention is to substantially increase value addition within the country. This is being done through appropriate financial and fiscal incentives,” one of the officials said.

However, industry analysts believe the goal of PMP for mobile phones is far from achieved. An analysis by Hong Kong-headquartered technology research firm Counterpoint showed that due to the focus on assembly rather than manufacturing, India imported $13 billion worth of components in 2018.

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“Not many high-value components are being sourced from India. As a result, local value addition in India was at 17 per cent during 2018. This helped the country save $2.5 billion in forex but increased assembly operations in India led to imports of mobile phone components going up to $13 billion,” said Tarun Pathak, associate director, Counterpoint Research.

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Could boost local production, as well as increase exports

The centre has set itself a target of net zero imports in electronics by 2020 and the phased manufacturing programme for mobile phones was launched with the goal of widening and deepening the mobile handsets and components manufacturing ecosystem in India. Currently, there are 35 manufacturing units of LCD/ LED TVs and 128 units of LED products in the country, which the government hopes to increase as it moves towards increasing not only domestic electronic production but also exports of electronics goods.

Under the PMP for cellular handsets, a four-year plan was notified as per which, duties were to be introduced on mobile phone chargers, battery packs and wired headsets in 2016-17 to encourage domestic production, followed by mechanics, USB cable, microphone, keypad in 2017-18.

In 2018-19, local manufacturing of printed circuit board assembly, camera module and connectors was pushed, while in 2019-20, production display assembly, touch panel, vibrator motor will be pushed.

Counterpoint said that half of the cellular handsets sold in India in 2018 were imported as semi-knocked down units (SKDs) while only 34 per cent were imported as completely knocked down units (CKDs). However, by the end of 2019, handsets imported as CKDs are expected to reach 75 per cent while 25 per cent will be in the form of SKDs, it said.

“We think that the government will first push to localise the components or sub-components under PMP to drive value addition. This can lead a transition from SKDs to CKDs quickly over the next two years,” Pathak pointed out.

The local manufacturing of these items is pushed by introducing import duty on fully assembled parts, while reducing duties on raw materials for these components, thereby incentivising manufacturers to set up domestic capacity.

As per a report prepared by IT ministry on “India’s trillion-dollar digital opportunity”, domestic mobile handset manufacturing output increased from 60 million units in 2014-15 to 225 million in 2017-18. The report noted that this has caused import reduction of 37 per cent for mobile phones.

“The time is ripe to focus on medical electronics and consumer electronics such as LCD, LED televisions, LED lighting products and set-top boxes, along with automotive electronics,” a government official said.

Earlier this month, the Union Cabinet granted its clearance to National Policy on Electronics 2019, with an aim to promote domestic manufacturing and export in electronic system design and manufacturing (ESDM) to achieve a turnover of $400 billion by 2025.

The turnover amount shall include targeted production of one billion mobile handsets by 2025 valued at $190 billion, including 600 million mobile handsets valued at $110 billion for export.