Budget 2023: Phone manufacturers eye PLI for component manufacturing

The Indian smartphone market is set to mark either low single-digit growth or a second year of contraction in shipments in 2023, as per analysts. Analysts say telcos and smartphone brands will work together to push feature phone to smartphone conversion to push sales.

Key drivers
1. Adoption of 5G networks

• Drive a rise in average selling prices
• Boost the ongoing premiumisation of the handset industry
• A strong upgrade market likely to open up, boosting revenues.

2. Pick up in domestic manufacturing

• Component manufacturing expected to pick up in India
• Will drive local manufacturing
• Lower prices of locally made phones may drive demand
  

Issues and concerns:

• Lull in demand in high volume budget segment
• Supply chain disruptions in China
• Increased government scrutiny on smartphone brands

Smartphone Shipments (Expected) (In millions)	2022	2023
Counterpoint Research	158	175
Canalys	151	165
CMR	152-154	165-168

Key Demands

• Rationalisation of duties on high-end mobiles, parts and components, and sub-assemblies.
• Extend SPECS scheme for 5 years, with budgetary outlay of Rs 10,000 crores.
• A PLI scheme for component manufacturing

"...With the upcoming budget, we hope to see an affirmative move to foster a vibrant local component supply chain ecosystem. This in turn will help India become self-sufficient, and will provide the right impetus to make India a trillion-dollar digital economy," - Muralikrishnan B, President, Xiaomi India.