Description
Mobile telephony was introduced in India in 1995. The start to this industry in India, however, was
very slow. The Indian government was not supportive to the new companies of the industry. As a
result of unfriendly telecom policies, high licensing fees and absence of a proper telecom regulatory
body lead to exit of these private players in the next few years.
(ISBN) - 978-81-928926-3-4 Page | 27
www.semsindia.org
SWOT ANALYSIS OF INDIAN MOBILE PHONE
MARKET WITH RECOMMENDATIONS FROM
STAKEHOLDERS: A TO DO LIST APPROACH OF
MANAGING NEW FIRMS
Faisal Akhtar
1
Asif Akhtar Khan
2
ABSTRACT
has performed admirably in registering outstanding growth rates consistently to achieve a
tele-density which is over 74% now. The tariffs are the lowest in the world. The multiplier
effect of the vastly expanded and improved telecommunication services has been visible
and has contributed handsomely to the GDP growth of the country. During the year 2015-
16, there will b
considerable speculation about the correlation between investments in telecommunications
and economic development, yet, there has been very little research available in the area.2
Researchers face interdisciplinary research challenges; understanding the range of these
challenges and confronting them requires coordinated research efforts. This paper aims at
contributing to the future of mobile business research in India by proposing a roadmap to
systematic guideline for future research efforts, defining mobile business and priorities
future research. A methodology consisting of both qualitative and quantitative methods, is
to be adopted, part one is a qualitative study of academic and industrial literature, data and
records to prepare a SWOT analysis report with the help of F Tilli model.3 Part two will
focus on semi-structured expert interviews with (a) company channel partners and (b) end
users. Where respondents will express understanding of mobile phone market, as well as
to enter Indian mobile phone market.
KEY WORDS: Mobile Phones, Globalization, New firms
INTRODUCTION
Mobile telephony was introduced in India in 1995. The start to this industry in India, however, was
very slow. The Indian government was not supportive to the new companies of the industry. As a
result of unfriendly telecom policies, high licensing fees and absence of a proper telecom regulatory
body lead to exit of these private players in the next few years.
The industry got a new life in 1999, when the Government of India announced a new telecom policy.
The plan was to provide telephones on demand by 2002. A major point of the policy was to allow
unrestricted private entry into almost all mobile service sectors. The mobile service providers were
allowed to share their infrastructures with other operators. It also helped the private operators to
break even faster by allowing them to migrate from fixed license to one-time entry fee with revenue
sharing.
1
Research Scholar, Department Of Business Administration, DDU Gorakhpur University, Gorakhpur
2
Asst. Professor, Dept. of Management Studies, CIPET, Ministry of Chemicals & Fertilizers, Lucknow India
(ISBN) - 978-81-928926-3-4 Page | 28
www.semsindia.org
However, by 2001, there was steady increase in the demand for mobile services. The private
companies concentrated on providing basic telephonic services to consumers. By 2002, the industry
was on a high, and with the popularity of mobile phones the customers started demanding better
services and lower prices.
growth got fueled as incoming calls on mobile phones were made free. The sudden increase in growth
on mobile phone subscriber can be seen in the following table:
No of mobile subscribers Time taken
0
1 Million 1995-1998
1
5 Million 1998-2001
5
10 Million 2001-2002
Growth of mobile phone subscribers
By May 2005, the number of cellular phone subscribers in India had risen to 55 million. Out of these,
subscriber base has crossed the 100 million mark, making the country the fifth largest in the world
in number of subscribers. According to a report in PTI, GSM-based subscribers number 75 million
while CDMA-
4
. According to IDC (International Data
Corporation), the number was expected to reach 148 million by 2009.
TELE DENSITY
874.68 Million, thereby making the overall Tele-density in India 73.11 at the end of 2011. There has
been 25-fold increase in mobile subscriber base in a span of just five years from 2000-01 to 2005-
06. During the same period, mobile-density has increased more than 23-fold from 0.35 in 2000-01
to 8.12 in 2005-06. During the year 2015-16, there will be 90 mobile phones for 100 people in the
country.
Mobile Tele Density
Source:http://www.trai.gov.in
(ISBN) - 978-81-928926-3-4 Page | 29
www.semsindia.org
The saturation level of mobile-density for a country is likely to depend on whether it is an early
adopter or a late adopter of telephones. Early adopters (developed countries) are expected to have
lesser reliance on mobile phones (due to high switching cost) whereas late adopters (developing
countries) are expected to have lesser reliance on main line telephones (due to high infrastructure
cost).
India being developing country have lesser reliance on main line telephone whereas a high demand
of mobile phone is expected. The main objective of the graph is the diffusion of mobile phones in
India to inform the larger discussion of managing the communication services as well as to assist
analysts concerned about assessing the impact of public policies in the evolution of telecom sector.
The analysis reveals that during the year 2015-16, there will be 90 mobile phones for 100 people in
the country. Numbers of mobile phones will exceed the number of people in the country by 2019-
20.
An effective management of mobile services requires an understanding of the factors that underlie
the evolution of the market. Factors such as market potential, timing and speed of adoption are of
great importance for Mobile phone companies. Understanding the evolution of mobile phone market
and its likely future trend is equally important for policy makers.
PRODUCTION AND EXPORTS OF MOBILE PHONES
The rise in handset production is due to tremendous market demand as evident in the soaring growth
in the number of mobile subscribers in India. According to the figures provided by the Delhi-based
Telecom Regulatory Authority of India (TRAI), over 6 million new mobile subscribers are added
each month, with a total of 233.63 million subscribers in December, 2007
5
and crossing 250 million
in early 2008,
6
with the addition of 8.53 million mobile subscribers in February alone.
6
Approximately 30% of the Indian population is expected to be covered by the mobile network by the
end of 2008.
8
Production and Exports of Mobile Phones in India
Source:http://www.dot.gov.in
(ISBN) - 978-81-928926-3-4 Page | 30
www.semsindia.org
Based on these figures, India is the fourth largest mobile market behind China, the United States,
and Russia.
9
India currently has the world's lowest call rates (US$0.02-0.03), the fastest sales of a
million mobile phones (1 week), and the world's cheapest mobile handset (US$ 17.2).
10
In
at wildfire pace. Part of the reason for the phenomenal growth of consumer demand for mobiles is
its affordability with companies passing on volume driven price reductions on to the consumers,
which in turn is further fuelling manufacturing and cut-throat competition among the leading mobile
manufacturers and telecom equipment vendors. Due to the global recession, demand for mobile
phones in India fell from 30% to just 8% but this global decline is anticipated to be temporary with
sales picking up in early 2010.
11
Mobile phone production in India increased to 512 million from a mere 144 million in 2002-03 at a
compound annual growth rate (CAGR) of 28.3 percent. Mobile phone production revenue reaches
$13.6 billion by 2011 from $4.9 billion in 2006, a CAGR of 26.6 percent. The growth in production
is driven mainly by the expanding mobile subscriber base in India and favorable local government
policies promoting local electronics manufacturing in India. India is the world's second-largest
telecom market after China, with the total wireless subscriber base crossing 850 million at the end of
June, 2011. By 2020, the handset demand is projected to reach 350 million a year. At present, Indian
mobile handset market is estimated to be in around 130 million handsets per annum. It added that
510 million handsets are estimated to be manufactured in India, during the same year.
India is geographically central to growing markets in the Middle East and Africa, making the time
span from design-to-market shorter than if the mobiles were to be transported from Europe or other
production zones. An added advantage is that indirect labor costs in India are about the same as in
China but direct labor costs are about 30% lower.
12
For these and other reasons, mobile
manufacturers plan to make India a hub for exporting mobiles to the Middle East, neighboring
countries and Europe, according to the Chief Executive of a consultancy firm that has helped many
of the leading telecommunications companies to establish manufacturing units in India.
13
Nokia is
already exporting 30-40% of its annual production at the Sriperumbudur (Chennai) plant to countries
in Southeast Asia, ie. Singapore, Thailand and Malaysia, and is planning to expand its exports to
other continents.
14
countries in the Middle East, Africa and Asia. The company has earmarked 10 million handsets from
its unit in India for export to Bangladesh, the Middle East, Nepal, Sri Lanka and Africa by 2010. It
also plans to export handsets to countries in Europe and the Commonwealth of Independent States
(KPMG 2008). Xenitis Telecommunications will be producing 160000 handsets a month for leading
mobile manufacturers and service providers in the country, of which 50,000 will be exported to Dubai
and West Asia.
15
When comparing Tele-density and production of mobile in India we can get an attractive figure
which is a clear indication for future growth for mobile phone companies waiting to enter the Indian
mobile phone market.
GOVERNMENT POLICY AND INITIATIVES
-07 on informatio
16
The
2007 in order to attract private investment in semiconductor fabrication and other technology-based
manufacturing industries in India.
17
The incentive would be 20% of the capital expenditure if the
(ISBN) - 978-81-928926-3-4 Page | 31
www.semsindia.org
units are set up in the SEZs, and 25% of the capital expenditure for units outside the SEZs. Indeed,
the state is throwing its weight behind the wireless market to ensure its rapid growth.
It is predicted that there will be a significant reduction in the number of fixed-line users in relation
to the rise of mobile phone subscribers. In line with the Government of India's liberalization and
economic reforms agenda which aims to achieve rapid economic growth and integration with the
global economy, the IT-related policies of the central and state governments have created an
n of pre-entry approvals, a drastic
reduction in licensing requirements, and facilitated easy access to foreign technology and foreign
direct investment.
Over the years, Foreign Trade Policy for electronics and IT products has been liberalized, customs
and excise procedures simplified, EDI implemented by customs & under implementation by central
excise and customs duty on specified capital goods and raw materials for electronics/IT hardware
has been brought down to zero%. Electronics Hardware Technology Park (EHTP) and Special
Economic Zones (SEZ) schemes have been tailored to boost manufacturing in the country.
18
Moreover, India is a signatory to the Information Technology Agreement of the World Trade
Organization and from the 1st March, 2005 the customs duty on all the specified 217 items has been
eliminated. Parts, components and accessories of mobile handsets including cellular phones are
exempted from excise duty and Central Sales Tax (CST) has been reduced from 3% to 2% (DIT
Annual Report 2007-08).
It proposed financial support of 5% of an investment of at least Rs. 100 crore over a minimum of 10
hectares of land, up to Rs. 50 crore of assistance, made by a private entity in an SEZ. Besides initial
capital investment aid, the draft proposal also outlined sops of zero duty and income tax benefits,
fiscal incentives to Indian manufacturers for products designed in India and manufactured in India
as well as products not designed in India but manufactured in India. These would include a reduction
of excise duty on telecom equipment. The Department of Telecoms also suggested exemptions from
entry tax, local sales tax and other taxes levied by state governments at least till 2015.
19
SWOT ANALYSIS OF INDIAN MOBILE MARKET
Here a SWOT analysis of Indian mobile phone market is done using F Tilli model. The model simply
does suggest some basic actions on Strength, Weakness, Opportunities, and Threats. At the same
time the model do advocate for time to time survey of stakeholders so as know the market status of
the company. If companies will keep mind these suggestions they may easily win the race.
(ISBN) - 978-81-928926-3-4 Page | 32
www.semsindia.org
STRENGTH
As discussed in earlier section that India being developing country have lesser reliance on main line
telephone whereas a high demand of mobile phone is expected. The Indian mobile phone market is
experiencing high demand of smart phones. India has completely developed single chip solution for
handsets. It is a known fact that India is hub for software development, In India there are numerous
mobile phone application developers. Govt. of India is liberal for local production, there ars schemes
for the same.
There is a clear indication that a company wishing to enter in to Indian mobile phone market need
not to worry about software side of the supply, they are to prepare themselves for hardware side.
Currently companies working in India are doing low value addition (Only panel production), mobile
plate, display, camera moulds are imported from china. New comer must think local production so
as to avail schemes for better and design their strategy keeping in mind these strengths.
WEAKNESS
Weaknesses of Indian mobile phone industry may be numbered as follows:
Reliance on import of chip, display and PCBs.
Negligent local product design activities.
Excise duty hike for mobile priced over rupees 2000.
Limited IP generation.
Limited availability of Necessary skill sets.
It seems that there is open invitation for production of mobile phones priced less than rupees 2000
to escape the hiked excise duty. These low priced mobile phones may be offered with a high level of
design keeping in mind the durability aspect of the product.
OPPORTUNITIES
Indigenous manufacturing volumes of mobile phones were estimated to be 136 million Mobile
handset market forecast
(ISBN) - 978-81-928926-3-4 Page | 33
www.semsindia.org
Source: IESA-Frost & Sullivan
units in 2012 and are poised to scale to 152 million units by 2015 growing at a CAGR of 37 percent.
There is extremely profitable opportunity for local production and gain prominence of local OEMs
(Original Equipment Manufacturers) such as Micromax, Karbonn. High value addition is not
performed in the country. It is golden opportunity for those wanting to start complete production in
India. At the same time India Geographically is hub for Middle East countries, a huge production
space in India is going to pay more than expectation.
The present model does suggest an early start of production (Complete value addition)
of mobile phones in India. Companies wishing to enter into Indian mobile phone market are advised
to start early without any late.
THREATS
There is basic infrastructure inadequacy of sufficient power, water and other utilities. There is fully
established manufacturing ecosystem in neighboring China and Vietnam.
This model suggest, Calm persistency as a prime focus. New comer companies need to continuous
strive for basic infrastructure. Political influence may work as boon to stand against inadequate
power, water and other utilities.
RECOMMENDATIONS FROM STAKEHOLDERS
*
This Section is a part of F Tilli model, it is used as refills, which means time to time recommendations
and opinion from various stakeholders is to be taken so that the company should be aware of the
current market choice and preferences.
RECOMMENDATIONS FROM ACADEMIC EXPERTS
Following are recommendations from academic experts:
Mobile phone industry is at introduction stage, an establishment of this time could prove to be a
fetching tree for future.
-
There are huge opportunities for new comer companies in the field of application development.
India is second largest population country in the world, nothing is impossible here. New companies
will earn a lot but firm determination is needed. I wish them all future success.
-
There is cut throat competition in every field. Mobile phone is a product of technology and
technology may change anytime, one must be careful before investing in this field.
J. P. Kushwaha
RECOMMENDATIONS FROM INDUSTRY EXPERTS
Following are recommendations from industry experts:
So far as our company is concerned 65% untapped area is left for business in India. Most of rural
area is left.
(ISBN) - 978-81-928926-3-4 Page | 34
www.semsindia.org
A cheap and best Indian brand is needed. Which must offer complete range of mobile from talky to
4G supporting phones having better battery backup and ultimate designs.
-
The more you invest. The more you earn in this industry. A hefty amount is needed for promotions.
RECOMMENDATIONS FROM SELLERS
Following are recommendations from sellers:
b Ahmad
*Recommendations are taken at root level. Respondents are supposed to have know how of mobile
phone industry
Bhaia jo dikhta hai wo bikta hai. Advertisement and promotion will help a lot to gain future
leadership.
A company which offer great Battery backup and phones at every increasing 100 rupees. Means
having a vast range of mobile phone in a company will attract every income group.
-
RECOMMENDATIONS FROM USERS
Following are recommendations from sellers:
Branded mobiles are equipped with original components which makes a clear difference to
understand brand power.
nothing else.
Nokia is losing market share due to costly and design less models in the Indian market. It must be
kept in mind for every producer.
CONCLUSION
Analyzing the mobile phone value chain in India, it is observed that the presence of a sustained and
growing demand for mobile phones is a key strength for the industry apart from an established
ecosystem for mobile phone manufacturing. However the current limitation is box level assembly.
Critical challenges include inadequacy of feeding industries as most components / raw materials are
currently imported. The import of chipsets and display, the most crucial components, presents a huge
void in the ecosystem and contributes significantly to the disability costs for mobile phone
manufacturing. Rising costs of manufacturing in China is seen as an opportunity for some of the
indigenous manufacturers who are currently outsourcing their design and manufacturing to China to
instead invest in local facilities. The possibility of Chinese mobile phone manufacturers themselves
looking at investing in Indian manufacturing facilities is yet another huge opportunity for the
ecosystem to develop. Policy initiatives are expected to boost manufacturing investments.
Companies wishing to invest are welcome to India.
(ISBN) - 978-81-928926-3-4 Page | 35
www.semsindia.org
REFERENCES
[1]http://tabtimes.com/news/ittech-stats-research/2013/01/15/mobile-business-apps-were-worth-25-
billion-last-year-will-be
[2] F Tilli is the name of the model. This name is proposed by the writer and limited to this study; hence
the use of the name of F Tilli model shall not be used in any future writings without prior intimation
and authorization from the writer.
[3]
[4] DIT Annual Report 2007-08
[5] Struthers-
www.telecommagazine.com
[6]http://www.sicc.ch/documents/IndiaNews_April2008.pdf
[7] Keerthi Alva, September 27, 2007
[8]
[9]http://www.edn.com/article/CA6445790.html?industryid=47479&nid=2790&rid=
[10] Department of Information Technology (DIT), Annual Report 2007-08
[11]
[12]http://www.mydigitalfc.com/industry/global-mobile-industry-may-lose-20-b-933
[13] -
EMS Now, December 13,http://www.emsnow.com/newsarchives/archivedetails.cfm?ID=15544
(Accessed 17-Dec-06)
[14]
[15]
accessed 29 May, 2008
[16]http://www.thehindubusinessline.com/2008/05/29/stories/2008052951990400.htm
[17] Information Technology Annual Report 2006-07, Government of India, Ministry of
Communications and Information Technology, Department of Information Technology, p. 6.
[18] Ministry of IT Annual Report 2007-08, p. 7http://www.mit.gov.in/download/annualreport2007-
08.pdf
[19]http://www.mit.gov.in/default.ASPX?id=243
[20]http://voicendata.ciol.com/content/Events/107010601.asp (January 6)
This document was created with Win2PDF available athttp://www.win2pdf.com.
The unregistered version of Win2PDF is for evaluation or non-commercial use only.
doc_633478122.pdf
Mobile telephony was introduced in India in 1995. The start to this industry in India, however, was
very slow. The Indian government was not supportive to the new companies of the industry. As a
result of unfriendly telecom policies, high licensing fees and absence of a proper telecom regulatory
body lead to exit of these private players in the next few years.
(ISBN) - 978-81-928926-3-4 Page | 27
www.semsindia.org
SWOT ANALYSIS OF INDIAN MOBILE PHONE
MARKET WITH RECOMMENDATIONS FROM
STAKEHOLDERS: A TO DO LIST APPROACH OF
MANAGING NEW FIRMS
Faisal Akhtar
1
Asif Akhtar Khan
2
ABSTRACT
has performed admirably in registering outstanding growth rates consistently to achieve a
tele-density which is over 74% now. The tariffs are the lowest in the world. The multiplier
effect of the vastly expanded and improved telecommunication services has been visible
and has contributed handsomely to the GDP growth of the country. During the year 2015-
16, there will b
considerable speculation about the correlation between investments in telecommunications
and economic development, yet, there has been very little research available in the area.2
Researchers face interdisciplinary research challenges; understanding the range of these
challenges and confronting them requires coordinated research efforts. This paper aims at
contributing to the future of mobile business research in India by proposing a roadmap to
systematic guideline for future research efforts, defining mobile business and priorities
future research. A methodology consisting of both qualitative and quantitative methods, is
to be adopted, part one is a qualitative study of academic and industrial literature, data and
records to prepare a SWOT analysis report with the help of F Tilli model.3 Part two will
focus on semi-structured expert interviews with (a) company channel partners and (b) end
users. Where respondents will express understanding of mobile phone market, as well as
to enter Indian mobile phone market.
KEY WORDS: Mobile Phones, Globalization, New firms
INTRODUCTION
Mobile telephony was introduced in India in 1995. The start to this industry in India, however, was
very slow. The Indian government was not supportive to the new companies of the industry. As a
result of unfriendly telecom policies, high licensing fees and absence of a proper telecom regulatory
body lead to exit of these private players in the next few years.
The industry got a new life in 1999, when the Government of India announced a new telecom policy.
The plan was to provide telephones on demand by 2002. A major point of the policy was to allow
unrestricted private entry into almost all mobile service sectors. The mobile service providers were
allowed to share their infrastructures with other operators. It also helped the private operators to
break even faster by allowing them to migrate from fixed license to one-time entry fee with revenue
sharing.
1
Research Scholar, Department Of Business Administration, DDU Gorakhpur University, Gorakhpur
2
Asst. Professor, Dept. of Management Studies, CIPET, Ministry of Chemicals & Fertilizers, Lucknow India
(ISBN) - 978-81-928926-3-4 Page | 28
www.semsindia.org
However, by 2001, there was steady increase in the demand for mobile services. The private
companies concentrated on providing basic telephonic services to consumers. By 2002, the industry
was on a high, and with the popularity of mobile phones the customers started demanding better
services and lower prices.
growth got fueled as incoming calls on mobile phones were made free. The sudden increase in growth
on mobile phone subscriber can be seen in the following table:
No of mobile subscribers Time taken
0
1 Million 1995-1998
1
5 Million 1998-2001
5
10 Million 2001-2002
Growth of mobile phone subscribers
By May 2005, the number of cellular phone subscribers in India had risen to 55 million. Out of these,
subscriber base has crossed the 100 million mark, making the country the fifth largest in the world
in number of subscribers. According to a report in PTI, GSM-based subscribers number 75 million
while CDMA-
4
. According to IDC (International Data
Corporation), the number was expected to reach 148 million by 2009.
TELE DENSITY
874.68 Million, thereby making the overall Tele-density in India 73.11 at the end of 2011. There has
been 25-fold increase in mobile subscriber base in a span of just five years from 2000-01 to 2005-
06. During the same period, mobile-density has increased more than 23-fold from 0.35 in 2000-01
to 8.12 in 2005-06. During the year 2015-16, there will be 90 mobile phones for 100 people in the
country.
Mobile Tele Density
Source:http://www.trai.gov.in
(ISBN) - 978-81-928926-3-4 Page | 29
www.semsindia.org
The saturation level of mobile-density for a country is likely to depend on whether it is an early
adopter or a late adopter of telephones. Early adopters (developed countries) are expected to have
lesser reliance on mobile phones (due to high switching cost) whereas late adopters (developing
countries) are expected to have lesser reliance on main line telephones (due to high infrastructure
cost).
India being developing country have lesser reliance on main line telephone whereas a high demand
of mobile phone is expected. The main objective of the graph is the diffusion of mobile phones in
India to inform the larger discussion of managing the communication services as well as to assist
analysts concerned about assessing the impact of public policies in the evolution of telecom sector.
The analysis reveals that during the year 2015-16, there will be 90 mobile phones for 100 people in
the country. Numbers of mobile phones will exceed the number of people in the country by 2019-
20.
An effective management of mobile services requires an understanding of the factors that underlie
the evolution of the market. Factors such as market potential, timing and speed of adoption are of
great importance for Mobile phone companies. Understanding the evolution of mobile phone market
and its likely future trend is equally important for policy makers.
PRODUCTION AND EXPORTS OF MOBILE PHONES
The rise in handset production is due to tremendous market demand as evident in the soaring growth
in the number of mobile subscribers in India. According to the figures provided by the Delhi-based
Telecom Regulatory Authority of India (TRAI), over 6 million new mobile subscribers are added
each month, with a total of 233.63 million subscribers in December, 2007
5
and crossing 250 million
in early 2008,
6
with the addition of 8.53 million mobile subscribers in February alone.
6
Approximately 30% of the Indian population is expected to be covered by the mobile network by the
end of 2008.
8
Production and Exports of Mobile Phones in India
Source:http://www.dot.gov.in
(ISBN) - 978-81-928926-3-4 Page | 30
www.semsindia.org
Based on these figures, India is the fourth largest mobile market behind China, the United States,
and Russia.
9
India currently has the world's lowest call rates (US$0.02-0.03), the fastest sales of a
million mobile phones (1 week), and the world's cheapest mobile handset (US$ 17.2).
10
In
at wildfire pace. Part of the reason for the phenomenal growth of consumer demand for mobiles is
its affordability with companies passing on volume driven price reductions on to the consumers,
which in turn is further fuelling manufacturing and cut-throat competition among the leading mobile
manufacturers and telecom equipment vendors. Due to the global recession, demand for mobile
phones in India fell from 30% to just 8% but this global decline is anticipated to be temporary with
sales picking up in early 2010.
11
Mobile phone production in India increased to 512 million from a mere 144 million in 2002-03 at a
compound annual growth rate (CAGR) of 28.3 percent. Mobile phone production revenue reaches
$13.6 billion by 2011 from $4.9 billion in 2006, a CAGR of 26.6 percent. The growth in production
is driven mainly by the expanding mobile subscriber base in India and favorable local government
policies promoting local electronics manufacturing in India. India is the world's second-largest
telecom market after China, with the total wireless subscriber base crossing 850 million at the end of
June, 2011. By 2020, the handset demand is projected to reach 350 million a year. At present, Indian
mobile handset market is estimated to be in around 130 million handsets per annum. It added that
510 million handsets are estimated to be manufactured in India, during the same year.
India is geographically central to growing markets in the Middle East and Africa, making the time
span from design-to-market shorter than if the mobiles were to be transported from Europe or other
production zones. An added advantage is that indirect labor costs in India are about the same as in
China but direct labor costs are about 30% lower.
12
For these and other reasons, mobile
manufacturers plan to make India a hub for exporting mobiles to the Middle East, neighboring
countries and Europe, according to the Chief Executive of a consultancy firm that has helped many
of the leading telecommunications companies to establish manufacturing units in India.
13
Nokia is
already exporting 30-40% of its annual production at the Sriperumbudur (Chennai) plant to countries
in Southeast Asia, ie. Singapore, Thailand and Malaysia, and is planning to expand its exports to
other continents.
14
countries in the Middle East, Africa and Asia. The company has earmarked 10 million handsets from
its unit in India for export to Bangladesh, the Middle East, Nepal, Sri Lanka and Africa by 2010. It
also plans to export handsets to countries in Europe and the Commonwealth of Independent States
(KPMG 2008). Xenitis Telecommunications will be producing 160000 handsets a month for leading
mobile manufacturers and service providers in the country, of which 50,000 will be exported to Dubai
and West Asia.
15
When comparing Tele-density and production of mobile in India we can get an attractive figure
which is a clear indication for future growth for mobile phone companies waiting to enter the Indian
mobile phone market.
GOVERNMENT POLICY AND INITIATIVES
-07 on informatio
16
The
2007 in order to attract private investment in semiconductor fabrication and other technology-based
manufacturing industries in India.
17
The incentive would be 20% of the capital expenditure if the
(ISBN) - 978-81-928926-3-4 Page | 31
www.semsindia.org
units are set up in the SEZs, and 25% of the capital expenditure for units outside the SEZs. Indeed,
the state is throwing its weight behind the wireless market to ensure its rapid growth.
It is predicted that there will be a significant reduction in the number of fixed-line users in relation
to the rise of mobile phone subscribers. In line with the Government of India's liberalization and
economic reforms agenda which aims to achieve rapid economic growth and integration with the
global economy, the IT-related policies of the central and state governments have created an
n of pre-entry approvals, a drastic
reduction in licensing requirements, and facilitated easy access to foreign technology and foreign
direct investment.
Over the years, Foreign Trade Policy for electronics and IT products has been liberalized, customs
and excise procedures simplified, EDI implemented by customs & under implementation by central
excise and customs duty on specified capital goods and raw materials for electronics/IT hardware
has been brought down to zero%. Electronics Hardware Technology Park (EHTP) and Special
Economic Zones (SEZ) schemes have been tailored to boost manufacturing in the country.
18
Moreover, India is a signatory to the Information Technology Agreement of the World Trade
Organization and from the 1st March, 2005 the customs duty on all the specified 217 items has been
eliminated. Parts, components and accessories of mobile handsets including cellular phones are
exempted from excise duty and Central Sales Tax (CST) has been reduced from 3% to 2% (DIT
Annual Report 2007-08).
It proposed financial support of 5% of an investment of at least Rs. 100 crore over a minimum of 10
hectares of land, up to Rs. 50 crore of assistance, made by a private entity in an SEZ. Besides initial
capital investment aid, the draft proposal also outlined sops of zero duty and income tax benefits,
fiscal incentives to Indian manufacturers for products designed in India and manufactured in India
as well as products not designed in India but manufactured in India. These would include a reduction
of excise duty on telecom equipment. The Department of Telecoms also suggested exemptions from
entry tax, local sales tax and other taxes levied by state governments at least till 2015.
19
SWOT ANALYSIS OF INDIAN MOBILE MARKET
Here a SWOT analysis of Indian mobile phone market is done using F Tilli model. The model simply
does suggest some basic actions on Strength, Weakness, Opportunities, and Threats. At the same
time the model do advocate for time to time survey of stakeholders so as know the market status of
the company. If companies will keep mind these suggestions they may easily win the race.
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STRENGTH
As discussed in earlier section that India being developing country have lesser reliance on main line
telephone whereas a high demand of mobile phone is expected. The Indian mobile phone market is
experiencing high demand of smart phones. India has completely developed single chip solution for
handsets. It is a known fact that India is hub for software development, In India there are numerous
mobile phone application developers. Govt. of India is liberal for local production, there ars schemes
for the same.
There is a clear indication that a company wishing to enter in to Indian mobile phone market need
not to worry about software side of the supply, they are to prepare themselves for hardware side.
Currently companies working in India are doing low value addition (Only panel production), mobile
plate, display, camera moulds are imported from china. New comer must think local production so
as to avail schemes for better and design their strategy keeping in mind these strengths.
WEAKNESS
Weaknesses of Indian mobile phone industry may be numbered as follows:
Reliance on import of chip, display and PCBs.
Negligent local product design activities.
Excise duty hike for mobile priced over rupees 2000.
Limited IP generation.
Limited availability of Necessary skill sets.
It seems that there is open invitation for production of mobile phones priced less than rupees 2000
to escape the hiked excise duty. These low priced mobile phones may be offered with a high level of
design keeping in mind the durability aspect of the product.
OPPORTUNITIES
Indigenous manufacturing volumes of mobile phones were estimated to be 136 million Mobile
handset market forecast
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Source: IESA-Frost & Sullivan
units in 2012 and are poised to scale to 152 million units by 2015 growing at a CAGR of 37 percent.
There is extremely profitable opportunity for local production and gain prominence of local OEMs
(Original Equipment Manufacturers) such as Micromax, Karbonn. High value addition is not
performed in the country. It is golden opportunity for those wanting to start complete production in
India. At the same time India Geographically is hub for Middle East countries, a huge production
space in India is going to pay more than expectation.
The present model does suggest an early start of production (Complete value addition)
of mobile phones in India. Companies wishing to enter into Indian mobile phone market are advised
to start early without any late.
THREATS
There is basic infrastructure inadequacy of sufficient power, water and other utilities. There is fully
established manufacturing ecosystem in neighboring China and Vietnam.
This model suggest, Calm persistency as a prime focus. New comer companies need to continuous
strive for basic infrastructure. Political influence may work as boon to stand against inadequate
power, water and other utilities.
RECOMMENDATIONS FROM STAKEHOLDERS
*
This Section is a part of F Tilli model, it is used as refills, which means time to time recommendations
and opinion from various stakeholders is to be taken so that the company should be aware of the
current market choice and preferences.
RECOMMENDATIONS FROM ACADEMIC EXPERTS
Following are recommendations from academic experts:
Mobile phone industry is at introduction stage, an establishment of this time could prove to be a
fetching tree for future.
-
There are huge opportunities for new comer companies in the field of application development.
India is second largest population country in the world, nothing is impossible here. New companies
will earn a lot but firm determination is needed. I wish them all future success.
-
There is cut throat competition in every field. Mobile phone is a product of technology and
technology may change anytime, one must be careful before investing in this field.
J. P. Kushwaha
RECOMMENDATIONS FROM INDUSTRY EXPERTS
Following are recommendations from industry experts:
So far as our company is concerned 65% untapped area is left for business in India. Most of rural
area is left.
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A cheap and best Indian brand is needed. Which must offer complete range of mobile from talky to
4G supporting phones having better battery backup and ultimate designs.
-
The more you invest. The more you earn in this industry. A hefty amount is needed for promotions.
RECOMMENDATIONS FROM SELLERS
Following are recommendations from sellers:
b Ahmad
*Recommendations are taken at root level. Respondents are supposed to have know how of mobile
phone industry
Bhaia jo dikhta hai wo bikta hai. Advertisement and promotion will help a lot to gain future
leadership.
A company which offer great Battery backup and phones at every increasing 100 rupees. Means
having a vast range of mobile phone in a company will attract every income group.
-
RECOMMENDATIONS FROM USERS
Following are recommendations from sellers:
Branded mobiles are equipped with original components which makes a clear difference to
understand brand power.
nothing else.
Nokia is losing market share due to costly and design less models in the Indian market. It must be
kept in mind for every producer.
CONCLUSION
Analyzing the mobile phone value chain in India, it is observed that the presence of a sustained and
growing demand for mobile phones is a key strength for the industry apart from an established
ecosystem for mobile phone manufacturing. However the current limitation is box level assembly.
Critical challenges include inadequacy of feeding industries as most components / raw materials are
currently imported. The import of chipsets and display, the most crucial components, presents a huge
void in the ecosystem and contributes significantly to the disability costs for mobile phone
manufacturing. Rising costs of manufacturing in China is seen as an opportunity for some of the
indigenous manufacturers who are currently outsourcing their design and manufacturing to China to
instead invest in local facilities. The possibility of Chinese mobile phone manufacturers themselves
looking at investing in Indian manufacturing facilities is yet another huge opportunity for the
ecosystem to develop. Policy initiatives are expected to boost manufacturing investments.
Companies wishing to invest are welcome to India.
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REFERENCES
[1]http://tabtimes.com/news/ittech-stats-research/2013/01/15/mobile-business-apps-were-worth-25-
billion-last-year-will-be
[2] F Tilli is the name of the model. This name is proposed by the writer and limited to this study; hence
the use of the name of F Tilli model shall not be used in any future writings without prior intimation
and authorization from the writer.
[3]
[4] DIT Annual Report 2007-08
[5] Struthers-
www.telecommagazine.com
[6]http://www.sicc.ch/documents/IndiaNews_April2008.pdf
[7] Keerthi Alva, September 27, 2007
[8]
[9]http://www.edn.com/article/CA6445790.html?industryid=47479&nid=2790&rid=
[10] Department of Information Technology (DIT), Annual Report 2007-08
[11]
[12]http://www.mydigitalfc.com/industry/global-mobile-industry-may-lose-20-b-933
[13] -
EMS Now, December 13,http://www.emsnow.com/newsarchives/archivedetails.cfm?ID=15544
(Accessed 17-Dec-06)
[14]
[15]
accessed 29 May, 2008
[16]http://www.thehindubusinessline.com/2008/05/29/stories/2008052951990400.htm
[17] Information Technology Annual Report 2006-07, Government of India, Ministry of
Communications and Information Technology, Department of Information Technology, p. 6.
[18] Ministry of IT Annual Report 2007-08, p. 7http://www.mit.gov.in/download/annualreport2007-
08.pdf
[19]http://www.mit.gov.in/default.ASPX?id=243
[20]http://voicendata.ciol.com/content/Events/107010601.asp (January 6)
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