Author(s): Raghu Gopal
Back in 2014, in an effort to create jobs and make India a manufacturing hub, the government of Prime Minister Narendra Modi launched its "Make in India" campaign. The government has been supportive of foreign companies willing to establish manufacturing facilities in India.
Last week, China's Huawei announced it will join a growing list of companies manufacturing in India, when it starts producing smartphones locally in collaboration with Flex, a leading global electronics contract manufacturer.
Huawei India CEO, Jay Chen, says India has become an increasingly important market for Huawei's smartphone business and plans to expand its presence there, competing against local and foreign brands. The company says it will manufacture phones bearing both the Huawei brand as well as its Honor sub-brand.
Huawei has become the world's leading telecom equipment supplier ahead of Ericsson and Nokia. Additionally, it has grown its global smartphone volumes enough to become the third-largest smartphone maker in the world behind Samsung and Apple. But as growth slows in its core markets, Huawei, along with most other leading manufacturers, has recognised the importance of having a presence in India and is pushing ahead quickly in this regard. The Flex plant in Chennai will begin manufacturing an Honor smartphone model as early as the first week of October 2016 and is expected to make 3 million units by the end of 2017.
Historically, manufacturing phones in India has been a challenge. Until recently, a lack of reliable suppliers and decayed infrastructure have hampered efforts to make phones in the country. This has forced most of India's more than 100 different phone brands to import from China and Taiwan. But moves to encourage local manufacturing in India have been effective: in the past year, India has attracted investment from 37 phone makers, which have generated thousands of jobs. These include Xiaomi, Vivo, Gionee, Karbonn, Lava, Micromax and Intex.
India is one of the world's fastest-growing smartphone markets and is attracting other smartphone manufacturers as well. For example, in 2015 China's Xiaomi partnered with Foxconn, a Taiwanese electronics contract manufacturer, to assemble phones in India. Lenovo started manufacturing smartphones in India in 2015 and last month LeEco announced plans to do so.
The majority of smartphones in India are priced below 10,000 rupees (about $150) and many below 5,000 rupees. This means Huawei will have to concentrate on its lower-end, Honor-labelled devices. Currently, the timing is perfect for affordable 4G devices as LTE gets rolled out and promoted throughout the country. This is an opportunity for Huawei to "make it in India" and a sign of the country's future role in the global smartphone market.