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Our Bureau

Bangalore, Aug. 31 New vendors — local as well as multinational ones — are expected to enter the mobile phone manufacturing market in India, according to Gartner Research.

At present, mobile phone production in the country is dominated by the top five global handset vendors Nokia, Motorola, Samsung, Sony Ericsson and LG.

There are very few local-brand mobile phone makers with low production volumes and are typically focused on low-end and mid-range handsets.

New players, aided by the global electronics manufacturing services (EMS) providers present in India, will enter the field.

“Existing global handset vendors as well as new entrants will outsource their production to EMS vendors to reduce ‘time to market’ and achieve faster penetration for their own branded handsets. This will raise EMS vendors’ share of total mobile phone production in India to nearly 40 per cent by 2011,” said Mr Ganesh Ramamoorthy, principal research analyst, Gartner, in a release issued.

Though domestic mobile phone production currently caters mainly to local demand, over the next five years Gartner expects as much as 30 per cent of production to be exported to neighbouring regions such as Africa, West Asia and other parts of South Asia which are also demanding low-cost handsets.

Mobile phone production in India is expected to grow from 31 million units in 2006 at a compound annual growth rate (CAGR) of 28.3 per cent to reach 107 million units in 2011.

Also, revenue is expected to reach $13.6 billion by 2011 from $4.9 billion in 2006, a CAGR of 26.6 per cent.

The growth in production will be driven mainly by the expanding subscriber base in India and favourable local government policies promoting local electronics manufacturing in India.

Mr Ramamoorthy cautioned that India faces a key challenge as it lacks a mature component supply base to support local mobile phone manufacturing.

“India’s production of vital components for mobile phones is very limited because much of it is imported. This may not be viable in the long term, especially with demand for handsets expected to grow rapidly. Therefore, establishing a reliable component supply base will be vital for the Indian handset manufacturing industry to stay competitive in both the domestic and export markets” said Mr Ramamoorthy.

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