India is lacking a skilled workforce for ramping up on Android smartphone manufacturing, some industry watchers said on Monday, as reported by Reuters. The South Asian country launched its “Made In India” initiative three years ago with the goal of boosting the local economy by incentivizing original equipment manufacturers to produce their offerings domestically instead of importing them but the first results of its efforts have been somewhat underwhelming compared to what Prime Minister Narendra Modi has been hoping for in mid-2014. Mr. Modi’s initiative also saw the introduction of robust tax fees for imported devices, essentially punishing OEMs who don’t produce their mobile offerings in the country, but many companies managed to circumvent them by simply importing components which aren’t covered by the same regulatory framework, then using them to assemble smartphones in India, ultimately keeping their manufacturing costs minimal while still not paying heavy taxes to New Delhi.
This practice is one of the reasons why the “Made In India” initiative has yet to produce more significant results, with some industry trackers claiming that only around five percent of the locally sold smartphones’ total production costs is actually being manufactured and not just assembled in the country. That portion usually pertains to accessories like handset chargers and earbuds which are bundled with various devices and aren’t costly to manufacture in most parts of the world. The executives of some Chinese phone makers believe the current situation is mostly forcing them to assemble devices in the country under the threat of extra taxes instead of incentivizing them to do the same, Reuters claims, citing an unnamed official of one major brand in the Far Eastern country.
New Delhi’s recent tax dispute with Nokia is another reason why some OEMs are reluctant to set up manufacturing operations in India, other industry members say, adding that the overall lack of skilled labor makes such ambitions hard to fulfill, which is something that the “Made In India” initiative seemingly didn’t account for. A number of tech giants like Foxconn previously announced plans to build new manufacturing facilities in the country but are yet to follow through with their promises. Consumer electronics makers are still expected to push for a resolution of the current situation in the near future seeing how many of them deem India to be a market that’s too important to ignore, with the country being only behind China in terms of annual smartphone shipments and sales.