India goes full throttle by expanding IT manufacturing

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The Indian Government may have a new subsidy for manufacturing wearable devices locally, while handset exports soared in the second quarter.

The Government has turned its focus towards increasing IT manufacturing domestically by providing sops and lucrative incentives. Some of them are as follows.

Wistron and Optiemus expand production of electronics:

Wistron has partnered up with Optiemus to expand production capacity for handsets, notebooks, tablets, IoT( Internet of Things), networking, and EV-use devices. Optiemus is likely to become a larger EMS provider with nearly 11,000 employees through this investment partnership.

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Wistron had entered India in 2015 by buying a minority equity stake in Optiemus in a partnership for assembling devices for brands including Taiwan’s HTC and South Korea’s LG. In 2017 Wistron began assembling iPhones in a small plant in the southern tech hub of Bangalore and has since expanded to a much bigger factory in Karnataka State’s Narasapura industrial area.

According to Counterpoint Research, Wistron’s partnership with Optiemus will help it scale and diversify manufacturing in India to other products beyond smartphones and key clients such as Apple to assembling devices locally for other global clients as well.

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Handset exports grow 350% in India in 2021:

The handset exports in India grew nearly 350% year on year in Q2 of 2021, rising from INR 13 billion to INR 46 billion according to India Cellular and Electronics Association. Imports in the laptops and tablet category have shown more than 50% increase in the Q1 from over 6,000 crore INR in 2020-21 to 10,000 crore INR in 2021-22.

The exports of electronics goods have also shown a tremendous rise of 100% YoY in Q1 of 2021-22 crossing the 20,000 crore INR mark.

India to subsidize local data center:

The Indian Government is considering subsidizing suppliers who set up their data centers in India, the subsidy amount can vary anywhere from INR 100 billion-120 billion and is currently awaiting approval from the government cabinet.

This move will make India a data hub, something the government is looking to promote especially after the new social media laws came into place forcing top dogs such as Facebook, Twitter, and others to set up indigenous data centers in India to segregate and sort the data appropriately.

India to subsidize local production of wearable devices:

The Indian Government has already introduced a Production Linked Incentive Scheme for the production of handsets and another for laptops and tablets as well. now they are looking to introduce another one for wearable devices.

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With this, they aim to gain 25% of the global market share, currently, the wearables market is growing at an exponential rate, the size now is $25-$30 billion but over the next 5 years it will grow to $80-$85 billion and India aims to manufacture $15-$20 billion worth of wearables by then.

If everything goes as per the plan of the Government, the PLI wearables will be notified by April 1 next year.

The industry is demanding incentives in the range of 7% to 8%, currently, the majority of the supply chain is situated in the US and China, if the Government moves fast, India can easily shift the supply chain.

India smartphone shipments are forecast at around 160 million for 2021:

According to Counterpoint Research’s estimates, India’s smartphone shipments for 2021 will reach 173 million units with double-digit growth on the year. Other research institutes have forecast India’s smartphone shipments for 2021 at 152-169 million units due to China’s pandemic restrictions and rising global shipping costs.

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This is despite the ongoing semiconductor shortage and supply chain issues. The chip shortage may persist until Q1 of 2022 but the supply chain is positively improving, logistical issues are not posing as many problems as they did during the early stages of the second wave of the Coronavirus.

Due to this, it comes as no surprise that the Indian smartphone market is set to reach record shipments in 2021.

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