Lok Sabha Question No. 2643 (UNSTARRED), answered on 2021-03-10
Subject: Indian Smartphone Market
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Kotha Prabhakar  Reddy, Komati Reddy Venkat Reddy, Geetha Viswanath Vanga

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED  QUESTION NO.2643

TO BE ANSWERED ON 10.03.2021

## INDIAN SMARTPHONE MARKET

## 2643       SHRI KOTHA PRABHAKAR REDDY: SHRI KOMATI REDDY VENKAT REDDY: SHRIMATI VANGA GEETHA VISWANATH:

Will the Minister of Electronics and Information Technology be pleased to state:

- (a) whether the Indian smartphone market declined by 1.7% in 2020 and if so, the details thereof and the reasons therefor;
- (b) whether  the  Government  expects  the  Indian  smartphone  market  to  grow  in  the current year driven by customers upgrading their devices and other factors and if so, the details thereof and the reasons therefor; and
- (c) the steps taken/being taken by the Government to improve the smartphone market in India?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI SANJAY DHOTRE)

- (a):  The demand of smartphones declined during the lockdown imposed in 2020 due to COVID-19. However, the domestic market rebounded thereafter and as per India Cellular and Electronics Association (ICEA), the overall impact on the market by the end of 2020 stands at about 1~2% lower, compared to previous year.
- (b):  Post COVID-19 pandemic, smartphones have become multi-utility devices that are facilitating  access  to  education,  health,  entertainment  services,  etc.  As  per  ICEA,  the mobile phone market size is expected to reach end at par by the end of 2020-21 as compared to the previous year. The mobile phone market is presently valued at approximately INR 2 lakh crore and is expected to grow by 20%~25% in 2021.
- (c):  The steps taken by the Government to promote domestic electronics manufacturing are annexed, which inter-alia will aid in improving the smartphone market in India.

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## Steps taken by the Government to promote domestic electronics manufacturing

1. National Policy on Electronics 2019 :  The National Policy on Electronics 2019 (NPE 2019) has been notified on 25.02.2019. The vision of NPE 2019 is to position India as a global hub for Electronics System Design and  Manufacturing  (ESDM)  by  encouraging  and  driving  capabilities  in  the  country  for  developing  core components, including chipsets, and creating an enabling environment for the industry to compete globally.

To attract and incentivize large investments in the electronics value chain and promote exports, following Schemes have been notified under the aegis of NPE 2019:

- (i) Production Linked Incentive Scheme (PLI) for  Large  Scale  Electronics  Manufacturing  notified  vide Gazette Notification No.CG-DL-E-01042020-218990 dated April 01, 2020 provides an incentive of 4% to 6% to eligible companies on incremental sales (over base year) involved in mobile phone manufacturing and  manufacturing  of  specified  electronic  components,  including  Assembly,  Testing,  Marking  and Packaging (ATMP) units.
- (ii) Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) notified  vide  Gazette  Notification  No.CG-DL-E-01042020-218992  dated  April  01,  2020  provides financial incentive of 25% on capital expenditure for the identified list of electronic goods that comprise downstream  value  chain  of  electronic  products,  i.e.,  electronic  components,  semiconductor  /  display fabrication units, ATMP units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods.
- (iii) Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme notified vide Gazette Notification No.CG-DL-E-01042020-218991  dated  April  01,  2020  provides  support  for  creation  of  world  class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play facilities for attracting major global electronics manufacturers along with their supply chain to set up units in the country. The Scheme provides financial assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country.
2. Phased Manufacturing Programme (PMP) has  been notified to promote domestic value addition in mobile phones and their sub-assemblies / parts manufacturing. As a result, India has rapidly started attracting investments  into  this  sector  and  significant  manufacturing  capacities  have  been  set  up  in  the  country.  The manufacturing  of  mobile  phones  has  been  steadily  moving  from  Semi  Knocked  Down  (SKD)  to  Completely Knocked Down (CKD) level, thereby progressively increasing the domestic value addition.
3. Tariff Structure has been rationalized to promote domestic manufacturing of electronic goods, including, inter-alia, Cellular mobile phones, Televisions, Electronic components, Set Top Boxes for TV, LED products and Medical electronics equipment.
4. Exemption from Basic Customs Duty on  capital goods :  Notified  capital  goods  for  manufacture  of specified electronic goods, including mobile phones, are permitted for import at 'NIL' Basic Customs Duty.
5. Simplified import of used plant and machinery :  The  import  of  used  plant  and  machinery  having  a residual life of at least 5 years for use by the electronics manufacturing industry has been simplified through the amendment of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, vide Ministry of Environment, Forest and Climate Change Notification dated 11.06.2018.
6. Relaxing the ageing restriction :  The  Department of Revenue vide Notification No.60/2018-Customs dated  11.09.2018  has  amended  the  Notification  No.158/95-Customs  dated  14.11.1995,  relaxing  the  ageing

## Annexure

- restriction from 3 years to 7 years for specified electronic goods manufactured in India and re-imported into India

for repairs or reconditioning.

7. Public Procurement (Preference to Make in India) Order 2017 : To encourage 'Make in India' and to promote manufacturing and production of goods and services in India with a view to enhancing income and employment, the Government has issued Public Procurement (Preference to Make in India) Order 2017 vide the Department  for  Promotion  of  Industry  and  Internal  Trade  (DPIIT)  Order  dated  15.06.2017  and  subsequent revisions vide Orders dated 28.05.2018, 29.05.2019, 04.06.2020 and 16.09.2020. In furtherance of the aforesaid Order, MeitY has notified mechanism for calculating local content for 13 Electronic Products viz., (i) Desktop PCs, (ii) Thin Clients, (iii) Computer Monitors, (iv) Laptop PCs, (v) Tablet PCs, (vi) Dot Matrix Printers, (vii) Contact  and  Contactless  Smart  Cards,  (viii)  LED  Products,  (ix)  Biometric  Access  Control  /  Authentication Devices, (x) Biometric Finger Print Sensors, (xi) Biometric Iris Sensors, (xii) Servers, and (xiii) Cellular Mobile Phones, for procurement to be made from locals suppliers.

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