October 19, 2020: The local production of smartphones is inching closer to normalcy with exports recovering to pre-Covid levels and imports falling by around half from June highs, government data showed.
As per data released by the Ministry of Commerce (MoC) on Tuesday, smartphone exports in the month of August totalled Rs 1781.1 crore by value, higher than March’s Rs 976.3 crore. Imports, though, were Rs 1050.1 crore, far higher than March’s Rs 13.4 crore.
The trend in imports, however, has been on a decline since June when the number hit a three year high of Rs 2225.2 crore. In fact, comparison on an annual basis with previous year’s festive season showed that imports of smartphones to India have aligned with the usual trend.
August last year recorded device imports of Rs 1984.7 crore by value, similar to current figures, MoC data showed.
Analysts say local production in the industry has ramped up to 80-85% capacity which is optimal given the current demand. Imports for August continue to be high due to delay in stocking up of inventory for the festive season.
“The worst is behind the smartphone manufacturing industry after facing a month-long shutdown, spread of Covid, customs scrutiny and labour shortage,” said Prachir Singh, research analyst at Counterpoint. “Everything led to almost a quarter’s delay in building up festive season inventory when brands launch close to 30-40 models every year.”
Pre-covid, 95% of the devices sold in India were assembled locally. But, for catering to high pent-up demand for smartphones beginning May-June when the economy started opening up, most handset companies had to import completely-built up units from China, given the limitations on local production owing to Covid rules.
ET’s email to Xiaomi, Oppo (which also assembles phones for sister brands Realme and OnePlus), Vivo did not elicit any response till press time.
Both demand and supply situations are falling back on track and thus we expect the imports to continue falling as brands ramp up capacity further, Singh added.
As per various industry estimates, September sales of smartphones are expected to cross 15 million, at par with previous year’s sales. For the whole year, 2020 sales are estimated to be 130-135 million against last year’s 154 million.
Source: Economic Times
