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Weak Demand Leaves Half of India’s Mobile Manufacturing Facilities Idle
India’s mobile phone manufacturing sector is experiencing significant underutilization, with nearly half of its production capacity lying idle. This development comes despite substantial investments made under the government’s Production-Linked Incentive (PLI) scheme, aimed at boosting domestic manufacturing.
Current Manufacturing Capacity and Production Levels
As of the end of 2024, India’s mobile phone production capacity exceeded 500 million units annually. However, actual production has been around 250 million units per year, with approximately 200 million units serving the domestic market and the remainder, primarily iPhones, designated for export.
Factors Contributing to Underutilization
The underutilization is largely attributed to a decline in demand for feature phones and entry-level smartphones. Following a surge in purchases post-COVID-19, the market has witnessed a downturn. Feature phone shipments decreased by 14% year-on-year in the third quarter of the fiscal year 2024-25, with 4G feature phones experiencing a sharp 46% drop. Smartphone shipments have remained relatively flat, showing only a 1% growth in 2023 after a 10% decline in 2022.
Impact on Manufacturers
Major PLI-eligible manufacturers, including Dixon Technologies, Samsung Electronics, Tata Electronics, and Foxconn, continue to drive production. However, smaller players such as Lava International, Karbonn, and Micromax have struggled to meet targets. Many have shifted focus to producing telecom equipment and wearables, while others have ceased operations altogether.
Future Outlook
Despite current challenges, industry analysts remain optimistic. The underutilized capacity is viewed as a potential advantage for future growth, especially with an anticipated surge in global demand from 2025 onwards. Since the introduction of the PLI scheme, India’s smartphone production capacity has grown by 35%, driven by investments exceeding government targets. iPhone manufacturers like Foxconn have been instrumental in this expansion, with the industry investing ₹9,100 crore against a target of ₹7,000 crore.
High-capacity utilization rates are observed among PLI-eligible exporters, with companies like Dixon Technologies and Foxconn achieving over 60% utilization. These firms are planning further expansions to meet the growing export demand, indicating a positive trajectory for India’s mobile manufacturing sector in the coming years.
