Expect a big take off in cellphone assembling! Imports of semi-knocked down devices up 64%

Handset makers such as Samsung and Micromax have doubled their imports of semi-knocked down (SKD) mobile phone units into India in June.

Cybex Exim Solutions, which exclusively shared its data with ET, has said that Samsung and Micromax have imported 6.9 million SKD mobile phone units in the last month, more than double the 3.4 million units of imports in the same month last year.

The cause behind the increase was the government's decision to change the import duty structure, which made the assembling of phones cheaper than importing them in the country.

In the quarter to June, import of SKD units jumped 64% year-on-year to 18.14 million, while sequentially, SKD shipments soared 55%, reported the financial daily.

Meanwhile, assembling is considered as the first step towards complete local manufacturing, a desire expressed by most of the top handset vendors such as Xiaomi, Micromax, Lava, Intex, Sony, LG, HTC and Asus.

Market leader Samsung has also talked about expanding its current production capacity, besides setting up a new factory.

SKD imports of the South Korean company, which now assembles all of its locally-sold phones at its Noida plant, crossed 4.2 million units last month. It has been importing on an average 3.4 million SKD mobile phone units a month.

Imports of SKD units by Micromax, India's No 2 handset player, have surged 10 times over the last year. "Local manufacturing makes us stronger as a brand in competition without doubt," Micromax chief executive officer Vineet Taneja said. "I feel a lot more confident today because we're able to deliver with great efficiency and speed and better prices than before."

According to data, the company assembled more than 1 million smartphones in June.

Foxconn, the world's largest contract manufacturer, sees a huge opportunity in India following the changes in the import duty structure. The company, famous for making Apple iPhones and iPads, plans to invest over $2 billion in setting up 10-12 factories for manufacturing smartphones and consumer electronics by 2020.

"Local manufacturing makes a significant impact on bottom line and to remain aggressive in the competitive market," said Gartner's research director Anshul Gupta. "In a highly competitive market with low margins, difference in import duty warrants for local manufacturing."

Intex, Lava and Karbonn, which were mainly importing all their products, are increasing local assembly by the month. Intex has increased production by four times since it started local assembly in November 2014.

(Image: Indiatimes)