India has achieved a significant milestone in smartphone exports, crossing the Rs 20,000 crore mark in November. Exports reached Rs 20,395 crore, reflecting a staggering 92% year-on-year growth compared with Rs 10,634 crore in November last year. US manufacturer Apple is leading the export race, with its iPhones being the most exported smartphones from India, followed closely by South Korean giant Samsung. Together, these two companies account for a lion’s share of smartphone exports in November.
Apple alone accounted for Rs 14,000 crore in exports, surpassing its Production-Linked Incentive (PLI) scheme commitment to export 70-75% of production value in FY25. The company has already exported over 80% of the total production value of iPhones assembled in India. These phones are produced by Apple’s key vendors: Foxconn’s factory in Tamil Nadu, Tata Electronics in Karnataka, and Pegatron.
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India’s focus on smartphone exports under the PLI scheme has positioned the sector as a key growth driver. The initiative encouraged major companies to shift their suppliers and assembly lines to India, aligning with the goals set in the National Policy on Electronics 2019. The policy targets exports of 600 million mobile phones worth $110 billion by 2025. If the current trends continue, smartphone exports could reach $18-20 billion by the end of FY25.
China, Vietnam leaders in smartphone exports
While India’s performance in smartphone exports has improved dramatically, local value addition remains a persistent challenge. India risks falling behind competitors like China and Vietnam due to high tariffs on imported components. Vietnam, in particular, has emerged as the biggest beneficiary of the China-plus-one strategy, which seeks to diversify supply chains. Over the years, Vietnam steadily ate into China’s export share, becoming the second-largest smartphone exporter after overtaking South Korea.
Largest smart phone exporters
Before 2010, both India and Vietnam had less than 1% export share. Over the last decade, Vietnam’s share surged to 12%, while India managed to secure only 2.5%, ranking seventh globally. China, despite a slowdown, remains dominant, exporting nearly 50% of the world’s smartphones. Other key players in the global smartphone export market include Hong Kong, UAE, the Czech Republic, the US, and South Korea.
Boosting domestic value addition
India’s domestic value addition in electronics currently stands at 18-20%, which is significantly lower than China’s 40%. To bridge this gap, the government looks to raise local value addition to 35-40% and make India a competitive hub for both finished goods and components. The strategy includes encouraging companies like Apple to establish research and development (R&D) and design centres within the country, capitalising on India’s skilled engineering workforce.
Although India is already recognised as a prominent design hub for the semiconductor sector, smartphone manufacturers have yet to fully embrace India as a base for design and innovation. Apple recently committed to strengthening local value addition by setting up a design and R&D subsidiary in India. Currently, Apple conducts its design operations in the US, China, and Israel. Increasing local value addition will not only reduce reliance on imports but also strengthen the manufacturing ecosystem in India.
Challenges to achieving $100bn target
Despite significant progress, India’s smartphone manufacturing sector faces several critical challenges that must be addressed to achieve the ambitious $100 billion export target. The first challenge is India’s heavy dependence on imported components like displays, processors, and memory chips, which substantially increase production costs. Without a strong domestic component ecosystem, India cannot compete effectively with established players like China and Vietnam.
High input tariffs also present a major hurdle for India’s electronics sector. Tariffs on components such as chargers and circuit boards stand at 20%, while those on parts like lenses, batteries, and back covers were recently reduced to 10%. However, combined with the GST increase from 12% to 18%, these tariffs have inflated both production and selling costs. This has reduced India’s competitiveness in global markets and slowed the growth of domestic production and exports.
Additionally, Vietnam continues to attract global manufacturers due to its favourable tax policies. Unlike India, Vietnam provides long-term income tax holidays, ranging from 10 to 30 years, tailored to attract global value chains. These predictable incentives make Vietnam a more attractive manufacturing destination compared with India, which offers fewer income tax exemptions.
The road ahead
India’s smartphone manufacturing sector has shown impressive growth in recent years, but the journey toward becoming a global export leader requires targeted reforms. The government must focus on simplifying the tariff structure to reduce production costs and encourage the development of a robust domestic component ecosystem. Efforts to establish R&D and design hubs in India must also be accelerated to foster innovation and reduce reliance on foreign expertise.
With a clear strategy to boost local value addition, streamline tariffs, and strengthen incentives for manufacturers, India can position itself as a competitive alternative to China and Vietnam. By effectively addressing these challenges, India can inch closer to its vision of achieving the ambitious $100 billion export target in the near future.