Benefits of India’s Phased Manufacturing Program

Dec 21, 2021

India implemented its Phased Manufacturing Program (PMP) in 2015. The program aims to increase the domestic production of mobile phone handsets. The Ministry of Electronics and Information Technology hopes that PMP will start a new sector of phone production. In time, the goal is to launch the country to the forefront of the international industry. In the three years since the program was implemented, it has been successful in many ways. The program includes not only cell handsets but also the sub-assembly of mobile parts. This is a new goal in the Indian tech industry, which has focused on parts rather than complete products. Ministry Secretary Ajay Prakash Sawhney said the program would help build a new manufacturing sector in India. [1]

In time, this sector can grow exponentially and spread to serve other parts of the globe. The program aims to make this happen by the late 2020s to the start of the 2030s. Currently, the program is in its initial phase. It’s funding the domestic assembly of mechanical components, such as microphones and USB cords. The next phase, coming in the 2018-2019 fiscal year, will expand to various products, such as circuit boards and camera parts. The program will expand further with incentives for domestic producers by the next fiscal year. This will help them branch out to touch panels, vibrating ringers, and more.

India’s New Manufacturing Facilities

The benefits have already become clear. Roughly 70 manufacturing facilities have been founded since the program’s start.  These offer new local jobs and domestic production opportunities. Currently, somewhere between 80 to 90% of production is taking place on a local level. The program will become even more cost-effective when a local supply chain is founded. It’ll also enjoy more control with an India-based assembly line. Another benefit of PMP is that it lays the foundation for future production industry growth. In 2016, India saw a sharp increase in the number of mobile manufacturing facilities. These reached almost 50, with a combined production output of 180M units. The domestic value addition is set to increase from 6% to more than 30% in a few years.

This includes local sourcing and assembly. Other estimates put returns at $15B by 2020, with more than a million new jobs created. The program will also provide future incentives to increase production in sub-industries, including assembly and components. Estimates put Indian phone production at 520M units by 2020 and over 1B by 2025. These estimates, of course, are only possible through the continuation of the program. Government intervention in the electronics industry might also improve working conditions and productivity. These problems currently restrict system growth. With incentives, the industry is expected to become a stronghold for Indian workers and provide domestic alternatives to products from East Asia. [2,3]

The program aims to make the Indian electronics industry self-sufficient. This saves money on many levels since it reduces dependence on imports. It has already relieved domestic manufacturers from many importation-associated costs. These include taxes on imported parts, along with basic customs duties and special additional duties. Thus, it’s already becoming more cost-effective to produce parts domestically. The government’s incremental strategy aims to help the industry better plan its investments. This will be more relevant as the shares increase in value. Some estimates say to expect a rise of more than 30%. Extending the PMP schemes to all populated PCBs and other domains beyond mobile phones will benefit a wider range of electronics manufacturing in India and accelerate the Make in India initiative, as well as the goals of India’s 2018 draft of its National Policy of Electronics. [4,5]

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