The next time you walk into a mobile phones showroom and check for the manufacturing location while buying a phone, don’t be surprised to find most of them in India.
Yes, India is now the world’s second-largest producer of mobile phones, as per reports by Indian Cellular Association and the Telecom and IT ministry. The annual production of mobile phones in India has increased from 3 million units in 2014 to 11 million units in 2017. This is no mean feat! India has replaced Vietnam and went on to overtake China to gain this position. Not only has this news filled us with immense pride, but also a lot of optimism on the job creation front.
Mobile telephony is the nucleus of an entire ecosystem. Across organized and unorganized sectors, the mobile phone ecosystem generates millions of direct and indirect employment. According to GSMA, the total economic value to be generated due to increased mobile phone production will be approximately Rs 14 lakh crores by 2020. This will include salaries, profits, and tax payments as well. The numbers quoted for employment generation are even more impressive. It is 3 million direct jobs by 2020, with an additional 2 million indirect jobs.
The statistics do look impressive but we need to know, “How”?
Mobile phones has been the harbinger of job creation in India since quite a few years now. However, with evolution in technology and the way data is shared and consumed keeps changing. Therefore, the verticals involved in creating those services also change over a period.
Source: GSMA Mobile Economy India 2016
(1) Mobile Phone Operators
Needless to say, the proliferation of mobile phones will lead to more players in the telecom operator space. Though this is a sector which is seeing huge consolidation and stiff competition at present, new operators would continue to venture into it and test the waters.
The voice segment is saturated but the data segment offers immense scope. So this segment presents great opportunities for new entrants who will step into this area with improved services, better infrastructure, and spectrums.
(2) Handset Manufacturing:
Mobile manufacturing is approximately Rs 94,000 crore industry, reports ICA. Till the past fiscal year, the mobile phone assembling units generated about 37000 to 40,000 jobs roughly. Most of the domestic brands such as Micromax, Lava, and Intex prefer local manufacturing for design enhancement and customization for a domestic requirement.
Even the government has set up electronics cluster, fabrication and assembling units, tax holidays etc. to boost handset manufacturing. There is a huge gap between skilled workers and companies are planning to provide extensive training and skill development programs.
(3) Content application services (Data services)
There are various forms in which content is created and disseminated through mobile phones. Apps are one such method. Report by App Annie suggests that 6.2 billion app downloads in 2016 were done by Indians. This clearly indicates the popularity of Apps as content distribution across the mobile users. These days content is being optimized for viewing in mobile phones.
Videos and Live TVs are another powerful medium for content distribution these days. Hence, the creation of these apps, videos or other forms of mobile-optimized content and distributing them is already a big job creator and this will become huge in coming days.
(4) The rise of M-commerce
E-commerce is past tense. Today it is M-commerce that is all set to rise and rule. This is a direct outcome of the app ecosystem. People are so comfortable on mobile phones shopping apps that most of the marketplaces are now making their presence felt exclusively through Apps. It is no surprise that today many online retailers are ditching their web platforms and selling their products only through apps. This trend is only expected to magnify in the times to come.
Retail m-commerce sales in India from 2015 to 2020 (in $ billion)
(5) Wireless Accessories
Globally, the wireless accessories market is growing at a CAGR of 6.9% approximately and India the story is no different. Wireless accessories market grows twice or thrice as compared to the mobile handset market because people usually purchase two-three accessory per mobile, such as content-sharing device, headset, chargers, Bluetooth smart etc. Based on the growth prospects of wireless accessories market, there may be many new players interested to foray into it, thus creating fresh employment opportunities.
Conclusion: The journey has begun, but a lot remains to be covered
Job creation through a manufacturing-led model has huge potential. However, this can be achieved if things are done in a right way. Experts say that mobile manufacturing contribution to the GDP is expected to be 8.2% by 2020 with a potential to add 8 lakh jobs. However, in India lot of components used for mobile handsets such as chipsets, display screens and circuit boards are imported. These make for half the value of mobile phones. Importing them does give cost advantages to manufacturers but reduces the job creation abilities of the sector. Only when the government promotes localized component manufacturing, will the true potential of mobile phones ecosystem be realized.