Beijing bleeding mobile phone exports as India captures 50% of fall in shipment from China, Vietnam

Representative image of a technician making a smartphone. Image Credit: Reuters

Looks like Beijing has some massive reasons to be worried about India emerging as a legitimate alternative to the manufacturing might of China. Due to sanctions from the US, and the banning of certain Chinese tech products from companies like Huawei, China has seen its exports take a hit.

The Chinese smartphone industry, however, has taken the biggest hit as manufacturers like Apple look to diversify beyond China, and into India, Vietnam and Indonesia.

China is especially worried about India as it is making some significant strides in mobile phone exports, and has been quickly closing the gap with China and Vietnam.

While mobile phone exports from China and Vietnam declined by 2.78 per cent and 17.6 per cent, respectively, during the fiscal year 2024 (FY24) compared to the previous year, India's exports surged by a remarkable 40.5 per cent, as reported by the Economic Times, which was based on data, on global trade data, as reported by officials.

This indicates that India's mobile phone exports reached $15.6 billion in FY24, capturing nearly half of the reduction in exports from China and Vietnam combined. This trend highlights India's success in attracting a substantial portion of the global mobile phone supply chain.

The smartphone production-linked incentive (PLI) scheme, designed to attract supply chain shifts from China, appears to be delivering tangible results. Although China remains the top mobile phone exporter, India is rapidly gaining ground.

According to the International Trade Centre (ITC), China's mobile phone exports fell from $136.3 billion in FY23 to $132.5 billion in FY24, a 2.8 per cent decline, amounting to a $3.8 billion reduction. Similarly, Vietnam's exports dropped from $31.9 billion in FY23 to $26.27 billion in FY24, a 17.6 per cent decrease, or a $5.6 billion reduction.

The combined reduction in exports from both countries totalled $9.4 billion.

In contrast, India's mobile phone exports rose from $11.1 billion in FY23 to $15.6 billion in FY24, a $4.5 billion increase, reflecting a growth rate of over 40 per cent. This indicates that India has captured nearly 50 per cent of the total decline in mobile phone exports from China and Vietnam.

Experts see this as a major win for India, particularly in light of the current geopolitical tensions with China. The Government of India has been actively encouraging companies to adopt a China+1 strategy to diversify their supply chains and manufacturing locations.

The success of the PLI scheme, particularly with Apple's involvement, has been a key driver of this growth. Apple has established India as its second manufacturing base for iPhones after China, producing the devices under the PLI scheme introduced in 2020. Three major iPhone vendors — Foxconn, Pegatron, and Wistron (now owned by Tata) — have set up factories in India following the scheme's launch. As a result, Apple's production and exports from India have doubled over the past two fiscal years.

According to data submitted by Apple's vendors to the Ministry of Electronics and Information Technology (MeitY) under the PLI plan, production increased from $7 billion in FY23 to $14 billion in FY24, while exports rose from $5 billion to over $10 billion during the same period.

iPhone exports now constitute 65 per cent of India's $15.6 billion in mobile phone exports and account for more than one-third of India's electronics exports, which surpassed $29 billion in FY24. This impressive growth in mobile phone exports demonstrates India's successful efforts to capture a significant share of the global supply chain shift from China, positioning itself as a key player in the international mobile phone market.