Why Can’t We Manufacture Mobile Phones in India?

“China is a shitty country and we need to ban all Chinese products. We anyway manufacture mobile phones in India,” a person said while typing on a Redmi smartphone.

Just because it was written on his smartphone that it is ‘Made in India’, is it really made in India?

Here is a trick.

None of the smartphones is manufactured in India but they are assembled in India. All the spare parts come from China, Taiwan, South Korea, the USA, and several other countries.

[Also Read: Reality of Indian Smartphone Brands]

Some companies import those parts to India and assemble here to get some tax benefits from the Government.

Challenges to Manufacture Mobile Phones in India

Let’s admit – India is a software country and not a hardware country.

You might find the best Engineers of the world in India with the sharpest brains but we actually suck in manufacturing things.

Multiple reasons – high expenses, unavailability of resources, lack of infrastructure. Above all, cheaper and better Chinese products.

Chips

Chips are required for literally everything in your smartphone – processors, microphone, speaker, antenna, etc. Basically, everything that has a circuit board.

Chips are made from sand and we have abundant sand, right?

Probably yes but we lack resources that take sand to turn into a chip.

I’d recommend you watch this video for a clear understanding. It explains the journey from sand to electronic chips.

Summing up the Stages: Sand > Silicon Ingot > Wafers > Lithography > Chips

And Lithography is the stage where we get a massive blow. We can’t do that.

Do you know why?

Because of this beast.

A typical Extreme Ultraviolet Lithography machine costs more than $120 Million that equals to Rupees 9,01,80,00,000!

Source: IEEE | ASML

How many such machines is India having right now? Zero.

China has more than 350 of them.

Even if we buy 2-3, it is not sufficient for Indian demand provided that all companies will use it.

Eventually, it is cheaper to import products than to buy that machine and use it.

I personally feel that it is not even necessary for the Indian Government or any business to buy that machine because it is not worth.

Reason? Climate Conditions of India are simply not favorable for manufacturing the Electronic parts.

Bengaluru is the only startup hub in India because it is the only city that is slightly favorable for electronics.

When it comes to manufacturing such fine parts, temperature and humidity can substantially affect productivity.

Display Panels

A display is the only component in a smartphone that doesn’t require a chip. It’s made purely from glass or plastic.

The best quality of display panels come from Samsung. Even Apple iPhones have display panels made by Samsung.

According to Samsung, the majority of its display manufacturing takes place in South Korea, China, and Taiwan.

However, Samsung built its factory in Noida, Uttar Pradesh which is also the largest factory in the world.

So yeah, we can hope that it will soon start making display panels in India.

Other major players include LG, Sharp, Foxconn, etc which make display panels in their respective countries.

Indian companies make display units but they are LCD displays and the quality is not too good. I don’t think you would even like them in your smartphones.

Infrastructure

1. Mass Production

China is vast in terms of population and area. While India is an agricultural country and Agriculture employs 49.9% of the population.

According to the Indian Cellular Association’s report to Business Today, India can only assemble 270 Million smartphones as compared to China which produces 1.1 Billion per year.

Also, China works on economies of scale along with the full-fledged ecosystem.

Let’s understand in easier terms. It’s cheaper to produce and sell 1000 products rather than making and selling a single product. That’s how the wholesale market works.

Skilled labor is way too cheap in China as compared to any other country.

2) Logistics

Another important point to note is that companies are making all the components in China. So logistics becomes cheaper.

Importing 4 different parts and assembling costs higher due to the expenses. India is lacking here.

As a result of mass production and the complete ecosystem at the same place, cost per unit production is the cheapest in China.

3) Cost of Electricity

Currently, the price of electricity in China is 0.077 USD per kWh.

Contrarily, the price of electricity in India is 0.078 USD per kWh.

This might not look a huge difference but when it comes to millions of kWh and that too for a long time, it makes a difference.

Also, Indian Rupee is weaker than the Chinese Yuan in the International market. So, it is more like a loss for India.

4) Incentives and Benefits

China has been welcoming global companies to manufacture in their country by giving several benefits and incentives for a very long time.

India didn’t even talk about ‘Make in India’ until a few years back.

This is where we left behind.

It’s like a student waking up at the last moment to study for an exam the next day. While the topper has been studying since the beginning of the year.

Positive Sides Before We Manufacture Mobile Phones in India

With the recent stable conditions, India seems to be getting more global companies. We see more investments these days.

Although we cannot purchase chips, for now, there is still hope for the future. We might do that in the future.

1. Samsung opened its largest factory in Noida, Uttar Pradesh. I have mentioned this above
2. Apple iPhone maker Foxconn has already built its plant in Andhra Pradesh and Tamil Nadu
3. Oppo, Vivo, Realme, Xiaomi and several other brands have their assembly plants in India

[Also Read About: BBK Electronics]

I agree with the point that these companies are merely assembling their phones in India but there is still a thin line of hope.

Almost every assembly factory eventually turned into a manufacturing plant.

So, let’s hope that Indian will also soon start producing smartphones and other electronic products in India.

P2