Handset production in the country has dropped drastically over the last year, from 180 million units in 2012 to 125 million in 2013, according to the Indian Cellular Association. Also, overall export numbers have declined 59 per cent, from 110 million units in 2012 to 45 million in 2013.

A number of companies have either cut production or have shifted manufacturing partially to other countries such as Vietnam and Taiwan. With tax notices slapped on it, Nokia has shifted a significant part of its manufacturing outside India. Nokia’s biggest plant globally is near Chennai, employing nearly 30,000 people. The plant’s future is under a cloud after tax authorities sent notices to recover nearly Rs 3,000 crore, an amount Nokia has disputed.

“The export value of mobile phones has declined from ₹13,000 crore in 2012 to ₹7,000 crore in 2013. This year it will be down to ₹3,000 crore,” says Pankaj Mohindroo, President, Indian Cellular Association.

Policy inertia In 2008, the Government identified places such as Sriperumbudur (near Chennai) as hubs for mobile phone manufacturing. A number of companies, such as Nokia and Motorola, set up units to not just support the growing Indian market but also to export.

However, five years on, it’s a story gone sour. “Policy was not tweaked to encourage local production,” says Mohindroo. For example, export benefits were given only for phones with keypads when the market had shifted to touch-screen phones.

“The tax regime has not been positive. We have been asking for a policy to attract component makers,” says Mohindroo. Without component-manufacturers, phone-makers import everything, making handsets expensive.

Phone-makers find it cheaper to import devices from China and Taiwan. All Indian phone brands, which together account for 30 per cent of market share, depend on Chinese imports.

Mobile industry state of play by Indian Cellular Association

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