India has a good shot at slowly ascending global value chains
SummaryIndia's success story in mobile phone exports needs to be viewed as the first step in acquiring a deeper supply chain ecosystem, rather than mere assembly. Densification of supply chains needs to be promoted through easing domestic constraints on manufacturing, rather than trade barriers.
The splendid increase in mobile phone exports in recent years has been a success story for the Indian economy. Shipments of mobile phones assembled in India have increased by more than ten times over the past six years. And they have tripled over the past three years. Such assembly depends on imported inputs that flow across national borders with minimal tariff barriers. Some of these inputs require sophisticated technology. Assembly is just putting together inputs that others have produced. Hence the worry that there is very little value addition in the Indian factories that are now part of the sprawling supply chains of global consumer electronics majors such as Apple and Samsung.