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India becomes the net exporter of mobile phones, understand what is net exporter?

India exported 41.5 million phones and imported 5.6 million

India has become the net exporter of mobile phones for the first time. Till now, India’s import of mobile phones was higher than the export. The data for the financial year 2019-20 shows that India exported 41.5 million phones and imported 5.6 million phones making a total of net export of 36 million units.

Do we need to explain the net exporter meaning anymore? We don’t think so! Still, Suppose, India is exporting 50 phones to other countries and importing only 10 then we have net export of 40 phones.

India is the second-largest phones manufacturer in the world

India’s Union Electronics and Information Technology Minister Ravi Shankar Prasad had announced on June 2 that India has become the second-largest manufacturer of phones in the world after China. Even though we are the second most mobile-manufacturer, it doesn’t mean that we are producing the phones entirely in India. These phones are mostly assembled in India. Most of the components are imported from other countries. A mobile phone has around 300 components and sub-components in it.

India Cellular and Electronics Association data suggests that India’s phone manufacturing units had increased to 268 in 2018 from just 2 in 2014.

Phase-wise manufacturing program for phones

The government had launched a phase-wise manufacturing program under which it incentivized the local sourcing of parts. The program didn’t invite custom duties for parts required to manufacture cameras (in phones), microphones, chargers but custom duties were put for the entire microphones, camera (in phones), or chargers.

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This way the importing of parts of the mobile phone was made easier than importing a full mobile phone or a finished product to be put inside the cell phone. However, the phase-wise manufacturing program is not on schedule as it was to stop charging custom duties on displays and glass panels of phones in FY 2019-20 only. Currently, it has been delayed until September 30, 2020.

The local value addition has increased to 17 percent in 2018 from just 6 percent in 2016. But the current program will also discourage the makers to completely make the components here anytime soon. It will take some years to achieve the feat of 50 percent of value addition. It might take years of policy reforms if we want to achieve more than 50 percent of value addition.

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