New scheme to boost local manufacturing of mobiles, will iPhone get cheaper now?



  • FM Sitharaman has proposed a new scheme to boost local cell phone manufacturing.
  • The scheme will be detailed in the coming days.
  • It is likely to attract more players to begin manufacturing mobile phones in India.

In her Budget 2020 speech presented in the Parliament, union finance minister Nirmala Sitharaman proposed a government scheme that will boost the manufacturing of cell phones and electronic equipment in India. The announcement comes as an extension of the government’s flagship ‘Make in India’ programme that, FM says, will encompass major disruptions in the country’s tech domain. Mobile phone manufacturing is a crucial sector that needs robust regulations and provisions to attract more foreign players, which ultimately impacts over 800 million consumers.

Sitharaman said the details on the scheme will be announced soon. We can expect more waive-offs on the import duty that is currently levied on components such as smartphone and television displays. The unnamed scheme will also boost the production of electronic equipment and semiconductors that are integral for the assembly for consumer-end devices such as mobile phones, tablets, televisions, and more.

Currently, mobile phone manufacturers such as Samsung, Oppo, and Xiaomi have begun producing their smartphones locally, as opposed to mere device assembly earlier. Other players are following the move to escape the heavy taxes imposed on imported electronic items. Local manufacturing units also create more employment in the country something that is another major focus area of the central government. Not only the domestic manufacturing of mobile phones, but the government also wants the companies to aggressively venture into R&D within the country.

Will iPhone get cheaper?

Nothing is certain right now, at least not until the government comes out with the proposed policy. But if Apple starts ramping up manufacturing of the iPhone in India, the device is bound to get cheaper. Other phones that are manufactured in India will also likely get cheaper but the impact, in relative terms, can be significant on the iPhone because the way Apple pegs the Dollar-Rupee rate. In Apple calculation this rate is often more than Rs 90.

Domestic manufacturing of mobile phones has also been fruitful for some companies, including Apple, in India. Contrary to its earlier position in Indian smartphone market, Apple now enjoys a share of 4 per cent, which is significantly higher, thanks to the local production of the company’s hit mobile phone iPhone XR.

Wistron, the company that possesses the contract to manufacture the iPhone for Apple, opened its third facility in India in a bid to ramp up the production. Another Apple supplier Salcomp is taking over Nokia’s closed facility in Chennai to scale up manufacturing. The iPhone models such as iPhone 6S, iPhone XR are now made in India, however, most intricate parts are still imported.

Producing iPhone locally has led to frequent price drops on iPhone units ensuring affordability something that a major chunk of Indian customers has always demanded. iPhone XR is available for as low as Rs 42,990 in India, which is on par with the pricing of smartphones from companies such as OnePlus and Samsung.

Besides, Apple has been in talks with the government to open its retail stores in India to proliferate into the consumer segment that shops products offline. A recent report has claimed that Apple is ready to launch its online marketplace in India, in competition to its partner websites such as Flipkart and Amazon.

Allocation for quantum computing

While the union budget dealt largely with weightier issues like health, education and defence, the finance minister in her speech also touched upon some topics that would be of interest to people who read tech news. One of these topics is quantum computing, a new emerging form of computing that a number of countries and companies are researching. The minister in her speech said that India will allocate Rs 8000 crore in the next five years in areas related to quantum computing research. For now quantum computing remains a research topic in labs across the world, although Google recently said that it has managed to create a quantum computer that can do real-world calculations. Challenges, however, remain and so far there is no commercial application of quantum computing.

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