Phone companies including Panasonic, Lava to scale up local production..

NEW DELHI: Mobile phone makers such HMD Global, Lava and Panasonic are finalising plans, including investments, for higher scale of local manufacturing, in tandem with the government’s likely imposition of duty on imported printed circuit board (PCB) assembly from the coming fiscal year. 

Heads of HMD Global — makers of Nokia brand of phones, Lava International and Panasonic India — said the government’s phased manufacturing programme (PMP), which envisages increasing the scale of local manufacturing by specifying components on which import duties will be levied over couple of years, could make India a manufacturing hub over the long term. But, the duty impositions may drive prices of devices higher in short term as the component ecosystem wasn’t in place. 

“We are working with our partners to manufacture more and more components (in India). SMT is definitely on the cards for us,” said Ajey Mehta, head of India at HMD Global that makes the Nokia brand of devices in India through the world’s largest contract manufacturer Foxconn. He was speaking at the ET Telecom India Mobile Conclave 2018. 

SMT, or surface mounting technology, lines are used for populating printed circuit boards (PCBs). The government is likely to impose basic customs duty on electronic components such as populated PCBs, camera modules and connectors from April 1. The government has already put a 20% duty on smartphones in the February 1 Budget, raising it from 15% within two months. 

"We have a complete plan for 10 years so that design and component manufacturing can happen in India," said Lava International chairman Hari Om Rai. 

HMD’s Mehta though said that the cost of the devices in the near term could go up due to the import duty on some components. 

PCB makes up 40-50% of the cost of making a phone, so a duty on the import of the component will increase prices in the near term, but push local manufacturing in the longer term, handset makers said.

The evolving mobile phone ecosystem though has become a critical platform for content providers, with some like Airtel's Wynk and AltBalaji now beginning to monetise content. 

"We have a combination of subscription and ads for monetization, but it's very early days, some new models will also emerge," said Sameer Batra, CEO, Wynk, Bharti Airtel, adding that the cost of content was still high, and, therefore, carrier billing will play a big role, given the low proliferation of credit cards in India.