MeitY announces Phased Manufacturing Programme for mobile handset

The Ministry of Electronics and Information Technology (MeitY) has announced a Phased Manufacturing Programme (PMP) with the objective of promoting the depth in domestic manufacturing of Cellular mobile handsets. This programme will be rolled out over a period of time and has been prepared keeping in view the ‘state of play of the design/ manufacturing ecosystem’ in the country. The focus is to ensure that through appropriate fiscal and financial incentives, indigenous manufacturing of cellular mobile handsets and various sub-assemblies which go into manufacturing of handsets can be promoted over a period of time.

The Phased Manufacturing Programme has been notified with the objective of substantially increasing the domestic value addition for establishment of a robust Cellular mobile handsets manufacturing eco-system in India. The programme shall enable the Cellular mobile handset and related sub-assembly/ component industry to plan their investments in the sector. The phase-wise programme covers Mechanics, Die Cut Parts, Microphone & Receiver, Key Pad and USB Cable in the current financial year (i.e. 2017-18). It also aims to promote the indigenous manufacturing of populated printed circuit boards, camera modules and connectors in 2018-19; and display assembly, touch panels, vibrator motor and ringer in 2019-20. The programme will be extended to parts/ sub-parts/ inputs for aforesaid sub-assemblies as the manufacturing ecosystem evolves over the next few years.

The introduction of differential Excise Duty dispensation in the Budget 2015-16, i.e. Countervailing Duty (CVD) on imports of mobile handsets at 12.5% and Excise Duty at 1% without input tax credit gave an impetus to the Assembly, Programming, Testing and Packaging (APTP) model of manufacturing Cellular mobile handsets. As a result of implementation of PMP, the domestic value addition in manufacturing of feature phones will go up from about 15% to 37% and the domestic value addition in manufacturing of smart phones will go up from about 10% to 26% (With the simultaneous implementation of PMP-II, this value addition will go up by 21.2% in feature phones and 13.3% in smartphones; thereby making the value addition of 58.3% in feature phones and 39.6% in smartphones. PMP-II is currently under preparation by the Fast Track Task Force, set up by MeitY.)

40 new mobile handset manufacturing units and 30 mobile components/ accessory manufacturing units started during the last two years, resulting in direct employment for over 1,00,000 persons. This will give rise to an estimated indirect employment for 2,00,000 persons. Indigenous production of mobile handsets went up from 11 crore units valued at ` 54,000 crore in 2015-16 to 17.5 crore units valued at ` 90,000 crore in 2016-17. As a result of increase in domestic production of mobile handsets, the share of imported mobile handsets in total domestic demand is gradually coming down. The import of mobile handsets decreased from ` 56,000 crore in 2015-16 to ` 40,000 crore in 2016-17.

Speaking about the policy Ms. Aruna Sundararajan, Secretary, Ministry of Electronics & Information Technology (MeitY) said, “This initiative will help in building a robust indigenous mobile manufacturing ecosystem in India and we believe that it will incentivize large scale manufacturing. It is our roadmap to ensure an increase in the domestic value addition in manufacturing of mobile handsets. It will give a huge impetus to local mobile manufacturing and will help us meet a significant portion of the global handset requirement over a period of time. It will also create an ecosystem, where due to the growth in local manufacturing, mobile phones will become cheaper and will be accessible to millions of Indians, in turn giving a huge boost to the digital payments initiative of the Government.”

Speaking about the policy Mr Pankaj Mohindroo, National President, Indian Cellular Association (ICA), Chairman – Fast Track Task Force and Trustee – Center for Development of Electronics System Design and Manufacturing (C-ESDM) said, “There is no doubt that we are on a robust path of enterprise creation and developing a world-scale industry with an extremely serious global footprint. We will not get entrapped by protectionism, but will create deep competencies, both cost and skills, which will create a globally benchmarked workforce and complementary industries intertwined with the global mobile phone and component ecosystem equally encouraging global and domestic enterprises. We are fortunate to have excellent leadership in place, but we need to develop a very strong framework, competent stakeholders in the entire eco-system, from policy making to SME entrepreneurs in tier III and tier IV enterprises”.