HMD Global to make Nokia phones in India by 2022

New Delhi: HMD Global, the exclusive licencee of the Nokia brand for phones and tablets, will progressively switch to manufacturing all components in India by 2022, a top executive said.

The firm, at present, imports mobile phone components and assembles them in India.

“Until this year, we imported all our components and assembled them here. Now we will be manufacturing some of the components in India as well... next year more, and the year after that even more. It’s going to be a phased manner in which we start switching to component manufacturing also,” Ajey Mehta, vice-president India, HMD Global, said.

With an aim to boost local manufacturing, the Union government on 2 April imposed a 10% basic customs duty on import of smartphone components such as camera modules and printed circuit board (PCB) assembly. Prior to this, there was no import duty on these components. Moreover, in the budget for 2018-19, the centre had increased customs duty on mobile phones to 20% from 15%. The measures are in line with the government’s Phased Manufacturing Programme, which aims to boost local manufacturing of phones. In its first phase, in 2017-18, the government had targeted production of various components for three years—mechanics, die-cut parts, microphones and receivers, keypads and USB cables; printed circuit boards, camera modules and connectors in 2018-19; and display assemblies, touch panels, vibrator motors and ringers in 2019-20.

“For example, PCBs will attract a duty from this year, so we are ramping up our manufacturing to make sure we manufacture the PCBs in the country. We are doing it (manufacturing) with Foxconn. Similarly, the other parts of the phone over a period of time,” Mehta said, adding that he expects that by 2022, “a few things will continue to be imported, but almost the entire component ecosystem will start to set up in India”.

For this, the company is also in talks with the government for the latter’s support for the mobile components ecosystem.

“For example, for the (phone) battery, the plastic and copper industry is key, to make business sense for the components...the next focus has to be on building the components’ back-end ecosystem,” Mehta said.

Nokia phones are manufactured at the Foxconn plant near Chennai.

The company gives its manufacturing requirements to Foxconn which then builds its manufacturing plan in terms of geography and volume. Finland-based HMD Global was started by former executives of Nokia and set up business operations in India last year, followed by the launch of a dozen-odd devices throughout 2017. It has partnerships with Google for the Android operating system and with Taiwan-based Foxconn for manufacturing devices.

The company on Wednesday launched three new phones for the Indian market—Nokia 8 Sirocco for Rs49,999, Nokia 7 Plus for Rs25,999 and a new avatar of the Nokia 6 for Rs16,999.

It also announced the launch of Nokia phones shop—an online outlet for all Nokia devices and accessories in the country.

“Our ambition is to be a full range player, catering to all consumer segments, and through the year we will be launching either new devices or refresh our existing devices. In the next 2-3 years, our ambition is to be among the top three smartphone players and in the next couple of years, to be among the top three feature phone players,” Mehta said. India is among the top three markets in terms of volume as well as revenue for the company globally.

HMD Global has 510 distribution partners working exclusively with it in India. “Through them we cover 110,000 stores in India. We are planning to take that up by 10-20% in the coming year. We see our offline distribution as one of our strongest assets,” Mehta said.

After the launch of the ‘effectively free’ 4G feature phone by Reliance Jio, the company has also stepped up focus on this segment. “The feature phone market is a $10-11 million market a month... For us, feature phone business is a very important business because the opportunity is huge, the industry is large, and the brand is also strong,” Mehta said.

Nokia has five devices in this market priced between ₹ 999 and ₹ 3,700. The company plans to launch devices in both smartphone and feature phone segments in the coming year.