Mobile Phone Imports Down 33% In FY22 As Local Production Rises, Says Crisil Report

The production-linked incentive (PLI) scheme has pushed local mobile production up by around 26 per cent in FY22

India’s mobile phone imports declined by 33 per cent in FY22, thanks to the phased manufacturing programme and the production-linked incentive (PLI) scheme which have gone a long way to slash imports, citing Crisil report, the PTI said. 

The report has mentioned that the PLI scheme has pushed local mobile production up by around 26 per cent during the year.

Local production of mobile phones has been logging in a 33 per cent annual growth rate between FY16 and FY21, the pace of which slowed a tad in FY22 to 24-26 per cent. The growth registered in spite of the ongoing chip shortage, and three of the global manufacturers met the PLI production targets in FY22.

Crisil has projected the growth momentum in production to sustain, with a 22-26 per cent annual growth rate between FY22 and FY24 to Rs 4-4.5 lakh crore in value terms. Growth will be led by the PLI scheme, which is in the second year for most players, it added.

The report said that mobile imports fell 33 per cent year-on-year (YoY) in FY22 and the dependency on China came down to 60 per cent from 64 per cent in FY21, and the same is expected to fall further in the medium-term, the report said.

However, with rising production, electronic components imports, essential for mobile assembling/manufacturing, also jumped 27 per cent YoY.

The report said that despite such massive jump in local production, as much as 60 per cent of phones/components imports came from China in FY22, down from 64 per cent in the previous fiscal year.

As per the report, India has negligible share (under 1 per cent) in global supplies, which is topped by China at over 70 per cent and Vietnam (16 per cent). Indian exports constituted 1 per cent of Japanese demand, 3 per cent of Germany's imports and 9 per cent of the UAE demand in 2021.

As against this, the top five mobile importing countries (the US, Hong Kong, Japan, Germany, and, the UAE) accounted for 50 per cent of global handset imports in 2021, with China and Vietnam meeting the bulk of their demand.

The US is the largest importer of mobile phones, accounting for 20 per cent of global shipments, followed by Hong Kong at 15 per cent and Japan at 6 per cent. China alone meets 79 per cent of the US demand and Vietnam supplies 16 percent.

Last fiscal was significant as mobile exports from India surged 56 per cent YoY with support from the two schemes. Exports are expected to grow further and touch Rs 1-1.2 lakh crore over FY23 and FY24, Crisil said. However, Indian exports largely comprise low-end phones, priced below Rs 10,000.