This week, Ministry of Electronics and Information Technology (MeitY) joint secretary Sanjay Rakesh is off to Taiwan to woo cellphone component manufacturers. He’s asking them to set up shop in India. And the poster child for his pitch will be South Korean electronics major Samsung. The company has, after all, just set up its largest-ever plant in India, outstripping its operations in China and Vietnam. By 2020, this plant will allow Samsung to churn out 120 million smartphones a year, more than double its current capacity of 68 million. Samsung already has a plant in Noida, which has been churning smartphones since 2007.

For a government under fire on account of rising unemployment—India is currently facing its highest unemployment rate in 20 years—Samsung’s factory offers much-needed breathing room. Not only will the 35-acre plant in Greater Noida be a shot in the arm for the government’s Make in India initiative, but it is also expected to result in around 15,000 jobs.

Indeed, the factory is being hailed as a victory for the Make in India initiative. The result of concerted steps taken by the Indian government to boost smartphone manufacturing in India. In 2015, MeitY formed a task force to re-establish growth in the country’s mobile handset and component manufacturing ecosystem. Its stated objective was to promote large-scale manufacturing/assembling activity to achieve production of 500 million handsets by 2019.

Despite the renewed push and with just one year left to meet the task force’s target, India only managed to make/assemble 225 million handsets in 2017-18, according to the industry body India Cellular & Electronics Association (ICEA). Juxtapose this with just three million units produced in 2014, and the number looks huge. But there is still a way to go. The Samsung facility will play a huge part in meeting MeitY’s targets.


Analysts say that this could be a watershed moment for the local manufacturing of smartphones. But it may be premature to claim this for sure. In fact, these developments have an air of deja vu about them. A throwback to the time Finnish handset manufacturer Nokia bet big on India.

Back then, in 2005, the Finnish multinational was attracted by the tax exemptions offered through Special Economic Zones (SEZs) in India. It went all in, setting up a massive plant in Sriperumbudur, Tamil Nadu. At its peak in 2011, Nokia’s factory produced 155 million handsets and exported 105 million. Component manufacturers and other suppliers flocked to the area to service Nokia’s needs. Today, the factory stands closed. Gone are the phones, the jobs, and the vendors that complemented the factory. A couple of tax disputes were all it took to lay waste to the bustling industry.

This has since become a blot on India’s track record as a manufacturing destination.

AUTHOR

Vandana

Vandana is based in Delhi. She covers vertically focussed startups in consumer internet space and also writes on travel tech and smartphones for The Ken. She has spent 13 years in journalism covering a wide range of subjects- equity markets, mutual funds to education and skilling, working at organisations such as Business Standard, CNBC TV18 and The Week in the past.

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