HMD Global, which makes Nokia mobile phones, might explore manufacture of components in India, over the next two-four years. The move, which can help bring down costs, is likely to work in line with the Centre’s phased manufacturing programme.

The phased manufacturing programme of the Centre aims at “progressively increasing” domestic value addition for establishing a “mobile handset manufacturing ecosystem in India”.

According to Ajey Mehta, Vice-President and Country Head – India, HMD Global, it may, in the long term, also join hands with new contract manufacturers to increase production capacity here. Nokia’s current local manufacturing partner is Foxconn.

“We may look at other options (for local manufacturing) in the future. But, at the moment, we are happy with Foxconn. In terms of component manufacturing at a local level, the industry and us have agreed to adhere to the phased manufacturing programme,” he told BusinessLine while announcing HMD Global’s partnership with IPL franchise Kolkata Knight Riders.

Local manufacturing

Phone manufacturing in India remains largely about assembling. Chinese players like Xiaomi, OPPO, and Vivo had transitioned better from semi-knocked down (SKDs) to completely knocked down units (CKDs). These companies also plan to scale up their local manufacturing operations, albeit limited to assembling only.

According to Counterpoint Research’s data, India imported $13 billion worth of components in 2018. The research agency further pointed out that “not many high-value components are being sourced from India.” It added that the Ministry of Electronics & Information Technology’s phased manufacturing programme is running behind schedule as the implementation of Customs duties under Phase III, which targets display assembly, touch panel/cover glass assembly and vibrator/motor ringer have been delayed.

However, sources say, so far, the mobile phone charger making has been amongst the most prominent success stories of the programme. In fact, HMD Global’s Mehta pointed out that the company would “maximise its local component manufacturing” over the next two-to-four year period.

“We are looking at building the component manufacturing ecosystem. Currently, the PCBs (printed circuit boards) are being made indigenously through Foxconn. However, we intend to maximise the component manufacturing part over the next two to four years,” he said. According to Mehta, Nokia, which has positioned itself as a “people’s brand”, will be playing across all price points in both the feature phone and smart-phone segments. Feature phones continue to be an important part of its India strategy.

Keeping in line with the industry average, nearly 60 per cent of Nokia handset sales come from offline channels, and the remaining from online players. So, the company could explore setting up standalone stores if there is a valid “commercial proposition” in it.

“Our aim is to be amongst the top three smart-phone players over the two to four years,” he said. Nokia, sources say, has a 3.5 per cent market share (as of Q4 2018) in the smart-phone segment.