For some years now, India has been playing a prominent role in the global economy, and has enjoyed a prominent position in the world’s mobile market. This position has recently been elevated.
In a statement issued jointly on March 28th, 2018 by the Indian Cellular Association (ICA) and India’s Information Technology (IT) Minister Ravi Shankar Prasad, it was confirmed that “India has now emerged as the second largest producer of mobile handset by volume.”
With the mobile sector forming a significant proportion of global trade and being a major factor in the mechanisms of digital commerce, this development is certain to have an impact on the mobile market as a whole, and on the global economy in general. We’ll be looking at these implications and India’s Mobile Market in this article.
India’s Mobile Market Rises to the 2nd Largest In The World
As far as the mobile market is concerned, India has proven to be a giant in the sector, as both a producer and a consumer. With 1.3 billion people spread across a vast and structurally diverse geographical area, the country can draw upon an immense pool of human resources and potential customers.
Since 2016 (when the nation was home to 20% of all mobile phone subscribers on the planet), India has had the fastest-growing smartphone market in the world. 27.5 million devices were sold there in the second quarter of 2016, and market projections from the Ericsson Mobility Report suggest that the number of mobile subscriptions in India will reach 1.4 billion by 2021.
Reports from February of 2015 confirmed that India’s mobile market had already overtaken the USA, establishing itself as the second largest in the world, behind China in the top spot. Data made available by market research firm IHS, China’s National Bureau of Statistics, and the Vietnam General Statistics Office showed an increase in annual production of mobile phones in India from 3 million units in 2014 to 11 million units in 2017.
The quick and widespread adoption of smartphones in India led to something of a demand-supply deficit which could only be met through increased importation, or a ramping up of the country’s manufacturing infrastructure. With market analysis suggesting that India’s mobile market growth in demand could be five times faster than the world’s largest smartphone consumer, manufacturers from China such as Xiaomi and Huawei have been investing heavily in the mobile market for India.
Production in India itself went into overdrive to meet this challenge, and in 2017, India overtook Vietnam as the world’s second largest producer of mobile phones. As a result of this, imports of mobile devices into the country fell to less than 50% of their former level, in the period between 2017 and 2018.
This dramatic rise in production has come about as the result of a combined effort involving the government of India, the Indian Cellular Association (ICA), and the Fast Track Task Force (FTTF), a new body set up by India’s Ministry of Electronics and IT to speed up and co-ordinate development in the mobile market.
The FTTF has set India the target of producing 500 million mobile phones locally by 2019, at an estimated value of around $46 billion. From this level of manufacture, the FTTF intends to export at least 120 million units (around $1.5 billion worth). The Fast Track Task Force has also set its sights on establishing a component manufacturing sector of $8 billion, and the creation of 1.5 million direct and indirect jobs in the mobile market by 2019.
Effects of the Growth of India’s Mobile Market
Within India’s mobile market, the desire for high-end smartphones has resulted in a steady decline in sales of lower specification handsets.
Smartphones are now the primary point of entry for mobile users in India – and also the first point of contact with the internet, for many consumers. It’s estimated that over half of India’s internet users get access via mobile devices (as opposed to desktop computers or laptops), and almost 60% of Indian users access the internet for the first time on their mobile phones.
For users of all generations, apps are fast becoming an essential part of daily life. 58% of smartphone users in India believe that mobile apps truly benefit their lives, while 77% of them have up to 30 different apps on their smartphone.
Despite this, revenues for app store content are only running at 15% of their estimated potential. A lack of access to formal banking systems and credit/debit cards is to blame.
Of its 1.3 billion citizens, India currently has only 19 million credit card users. To combat this trend, policy decisions have been made to lower the minimum price that may be charged for purchases in the app stores and to scale down app store prices in general. It’s hoped that this will bring mobile software down to within a range affordable by more of India’s lower-income consumers.
For mobile subscription plans, direct carrier billing or DCB has been proposed as the option most likely to disrupt the mobile market in India. This payment method doesn’t require subscribers to jump through so many hoops of security and bureaucracy as traditional payment card options and is expected to provide the 97% of users in India without a card payment option to gain access to the app stores.
India’s Mobile Market and the Benefits for the Global Economy
A 2015 study from the Boston Consulting Group pegged the annual value of mobile gross domestic product, or mGDP at a combined figure of over $1.2 trillion, for the six countries surveyed. This sum was derived from spending on mobile devices, mobile connectivity, and mobile commerce in Brazil, China, Germany, South Korea, the United States, and India.
With India’s increased production capacity and reduced reliance on importing smartphones, the emphasis for trading partners and external suppliers from the global economy has shifted toward servicing the infrastructure and software environment needs of the mobile market in India.
Due to its multi-part ecosystem (lots of different operating system versions, and a vast range of hardware), Android is currently the dominant force in India’s mobile landscape. Low-cost, entry-level smartphones like the Android One (introduced at a sixth the price of the iPhone 6) have helped Android to over 90% of mobile market share. But Apple has outlined plans for increasing their stake in the Indian market, citing direct carrier billing and the launch of Apple Pay as first moves.
A government-backed program known as the Aadhaar initiative has been reaping dividends for Korean mobile manufacturer Samsung, which is the first major name to buy into the scheme. The Aadhaar initiative assigns a unique identification number to every registered citizen of India and works from a biometric database of fingerprint and iris scans.
Users of Aadhaar-approved cellphones will be able to gain easier access to government services, subsidies, health care, and education, and have the option to open bank accounts or mobile subscription plans, remotely. And Samsung is the only company with an Aadhaar-approved device currently on the market.
The Unique Identification Authority of India (UIDAI), the body overseeing the Aadhaar initiative, has met with representatives from Google, Microsoft, Samsung, and the Indian smartphone maker Micromax, to discuss the issue of developing Aadhaar-compliant devices.
Gaming represents another window of opportunity for investors and developers in the Indian mobile market. Recent studies suggest that the mobile gaming sector in India is expected to reach $3 billion by 2019. It’s also reckoned that, of the 20 apps downloaded by smartphone users within the first month of purchase, five of them are games.
This level of interest is expected to increase, with mobile gaming accounting for a large proportion of the growth in India’s market for mobile commerce to its anticipated value of $19 billion by 2019.
And the Future?
Network access and connectivity are the major obstacles to be overcome, in the next phase of expansion in the mobile market of India.
Though fixed broadband speeds for internet access have seen an improvement in recent years, India has the slowest 4G LTE speeds in the world. As of 2016, less than 1% of India’s population had access to a 4G network – at a time when other nations like China are looking to the next generation of 5G.
So we can expect technological development and financial investment efforts to be concentrated on this aspect of the mobile market in the future if India is to maintain its strong position in the global economy.
Concerns surrounding mobile security will be soon to follow as this massive market continues to grow.
Share this Post