Challenges Amid India’s Smartphone Export Ambitions
In recent times, India has placed significant emphasis on expanding its smartphone exports. In November 2022, Prime Minister Narendra Modi commended the surge in phone exports as they surpassed the $5 billion mark. During the 2023 India Mobile Congress, Mr. Modi expressed optimism, stating that “soon the whole world will be using made-in-India phones.”
The government attributed this success to the Production Linked Incentive scheme, which encouraged major smartphone companies to shift their suppliers to India. These endeavors are in line with the ambitious target set forth in the National Policy on Electronics 2019, which aims for India to export 600 million mobile phones worth $110 billion by 2025.
However, with just a year remaining to achieve this goal, India’s smartphone exports remain below $10 billion annually, representing only a fraction of the target. Despite manufacturing a significant number of smartphones, most are consumed domestically. Recently, Reuters reported on a letter and a confidential presentation drafted by the IT Ministry in January of this year, in which Minister Rajeev Chandrasekhar expressed concerns about India potentially losing ground to China and Vietnam due to high tariffs on the import of mobile components.
India Emerges as Third-largest Exporter of Smartphones to the US
Consequently, India has ascended to the position of the third-largest exporter of smartphones to the US. Furthermore, the market share of Indian smartphones in the US has surged to 7.76% in the current fiscal year, marking a significant increase from a mere 2% in the previous year.
According to data from the Commerce Ministry, India’s smartphone exports to the United States surged to $3.53 billion in the April-December period of 2023, compared to $998 million in the corresponding period of 2022.
India’s smartphone exports experiencing a 3.5x growth has propelled the nation to become the third-largest smartphone exporter to the US. Meanwhile, over the nine-month period, the share of China and Vietnam witnessed a decline.
Trends in Smartphone Exports and Imports to the US Market
During the April-December 2023 period, China’s smartphone exports to the US market decreased to $35.1 billion from $38.26 billion the previous year. Meanwhile, Vietnam’s shipments of phones dropped to $5.47 billion from $9.36 billion in the same period of the previous year. Among the other major smartphone exporters to the US, South Korea’s exports increased to $858 million from $432 million, while Hong Kong’s sales declined to $112 million from $132 million in April-December 2022.
Imports of smartphones from the top five suppliers to the US also saw a decline during April-December 2023, decreasing to $45.1 billion from $49.1 billion in 2022.
Smartphones entered the Indian export roster in 2022-23, achieving shipments worth $10.95 billion. Capitalizing on this progress, exports surged to $10.5 billion from April to December 2023-24.
Following the introduction of the Product Linked Incentives (PLI) scheme and the participation of US-based iPhone maker Apple in domestic manufacturing, India is emerging as a significant production hub for smartphones.
