Exports of Indian-assembled mobile phones have increased manifold over the last few years. In an article for Mint, Dr Niranjan Rajadhyaksha, Executive Director, Artha Global, argues that although assembly does not add significant value, it is a window of opportunity for Indian manufacturing to strengthen its supply chains.
Excerpts below:
“Shipments of mobile phones assembled in India have increased by more than ten times over the past six years. And they have tripled over the past three years. Such assembly depends on imported inputs that flow across national borders with minimal tariff barriers. Some of these inputs require sophisticated technology. Assembly is just putting together inputs that others have produced. Hence the worry that there is very little value addition in the Indian factories that are now part of the sprawling supply chains of global consumer electronics majors such as Apple and Samsung.“
“There is now a fair bit of research on how China has used an initial entry into a global supply chain as an opportunity to build forward and backward linkages within the country. Moving from the assembly of final consumer goods to the domestic production of intermediate goods is a key task. Such densification of supply chains has enabled China to move up the global value chain, create a strategic advantage, and make it much more difficult to move supply chains out of the country. Also, moving up the value chain enables a country to increase the share of exports in its GDP even at the same level of aggregate exports. There are lessons for India here in the years ahead.”
Read the full article here.
