Handset headaches for manufacturers in India

Handset headaches for manufacturers in India

India’s mobile handset makers can restart production soon, according to press reports, but, unsurprisingly, the companies involved are not confident of getting back to full capacity on that day – or for a while after.

The Indian government has extended the nationwide lockdown till 3 May. However, some economic activity will be permitted from April 20 where coronavirus is not an issue. Stringent social distancing rules will still apply, however.

In the case of mobile phones, new guidelines for states and Union Territories from the Ministry of Home Affairs have permitted mobile handset and component manufacturers to restart production on 20 April. However, labour supply issues (notably the time it may take for migrant workers to return to their jobs), excess stock and lack of physical retail may bring capacity, distribution and demand management problems.

One media outlet has even suggested that handset companies may start with as little as 15 percent of capacity. Government figures suggest there are some 270 factories making handsets and components in India.

Indian media outlets have also indicated that have been requests from a number of brands and industry associations for concessions on the delivery of smartphones and on the movement of components for inland and export purposes at this time of restricted movement.

These may help, if they are granted, but when manufacturing restarts will high-end affordable phones be a thing of the past? The exchange rate, increased GST in India and component pricing may be further headaches for smartphone manufacturers when the market is again able to function.

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