Indian local value addition for “Made in India” smartphones is expected to be 16 per cent according to data sourced by businessline from Counterpoint – a global technology market research firm. As Indian localisation policies such as subsidy schemes and import curbs prompt smartphone manufacturers to set up smartphone production lines in India – Counterpoint estimates that the local value addition in India has grown from 6 per cent in 2016 to a projected 16 per cent for 2023.
Production impact
These numbers are for the industry across the board, that is, beneficiaries and non beneficiaries of the Centre’s production linked subsidy scheme for mobile phones. Counterpoint further highlighted that local value addition is expected to increase by only 1 per cent in 2023. Local value addition for smartphone manufacturing was already 15 per cent in 2022, according to Counterpoint estimates.
businessline also spoke with supply chain experts familiar with the production lines for Samsung and Apple. According to these experts the Indian value add for Samsung is between 25-30 per cent of the retail price of Samsung phones. In comparison, local value addition for made in India Apple iPhones is 6-8 per cent of its India retail price according to the expert.
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Apple and Samsung are considered to be success stories of the Centre’s production linked subsidy scheme for smartphones. Since the launch of the scheme in 2020, Samsung has routinely exceeded the Centre’s PLI targets for local manufacturing. Contract manufacturers for Apple, Wistron, Pegatron and Foxconn have also reported exceeding PLI targets in recent years.
Their role in the localisation of smartphone manufacturing becomes even more important as indigenous smartphone makers miss the latest PLI targets and Chinese smartphone makers are excluded from Centre’s subsidy scheme and are under the scrutiny of the Enforcement Directorate.
Local advantage
Samsung’s high local value add in comparison to Apple is largely a function of time. Samsung has been making mobile phones in the country even before the Centre introduced subsidies in 2020. Therefore it has localised a lot of its component ecosystem to the country instead of following the import and assembly model as per an executive working with a contract manufacturer for Samsung.
Samsung makes display and printed circuit boards for its mobile devices in India which are some of the most valuable components of a smartphone. In addition to this it has also localised the production of battery, display mechanicals and camera modules to India.
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Despite significant investments in Indian production lines by Apple, it still does not make displays for its iPhones in India. A source further added that Apple has likely started making printed circuit boards for certain models of iPhones in India, however production of PCBs is happening only at a limited capacity in the country.
Apple also sells its iPhones at a much higher premium over its bill of material (cost of manufacturing) in comparison to Samsung. A $1000 dollar iPhone will only cost $300-$350 to make, however the bill of material cost for a Samsung device retailing at the same price could be as high as $600 according to a senior executive. This is another reason why Indian value addition for Apple on retail price is much lower than Samsung.
