Bangalore: Mobile phone poduction in India is expected to grow at compounded annual growth rate (CAGR) of 28.3% from 31 million units in 2006 to 107 million units in 2011, IT research and advisory firm Gartner has said.
Moreover, mobile phone production revenue is likely to reach $13.6 billion by 2011 from $4.9 billion in 2006, a CAGR of 26.6%, Gartner said in its latest research paper.
The growth would be fuelled mainly by the expanding mobile subscriber base in India and favourable government policies, it said.
At present, mobile phone production in the country is dominated by five global vendors — Nokia, Motorola, Samsung, Sony Ericsson and LG. There are few local brands, with low production volumes, focused on low-end and mid-range handsets.
However, Gartner expects new local and global players to enter the mobile phone manufacturing market in India, aided by the global electronics manufacturing services (EMS) providers’ present in India.
Gartner principal research analyst Ganesh Ramamoorthy said: “Existing global handset vendors as well as new entrants will outsource their production to EMS vendors to reduce ‘time to market’ and achieve faster penetration for their own branded handsets. This will raise EMS vendors’ share of total mobile phone production in India to nearly 40% by 2011.”
Domestic mobile phone production currently caters to local demand. However, over the next five years, as much as 30% of production may be exported to neighbouring regions such as Africa, the Middle East and other parts of South Asia that have significant demand for low-cost handsets, Gartner said.
India, however, faces a key challenge as it lacks a mature component supply base to support local mobile phone manufacturing.
“India’s production of vital components for mobile phones is very limited because much of it is imported. This may not be viable in the long term, especially with 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 market and the export market,” he said.