Mobile phone mfg may be discontinued due to restrictions on supply chain cos: ICEA

The restoration of partial mobile phone manufacturing has been marred by challenges and may be discontinued if supply chain companies do not get approvals from authorities, according to a status report submitted by industry body ICEA to the government.

The India Cellular and Electronics Association (ICEA), which represents companies like Apple, Vivo, Oppo, Huawei, Foxconn, Wistron and Flex, also flagged the issue of labour unavailability.

Mobile phone production in the country is estimated to have crossed Rs 2 lakh crore in annual production value, with factories in Uttar Pradesh contributing around 60 per cent of the total.

Besides, the mobile phone makers are facing around 400 per cent rise in international freight tariff, which is expected to increase the cost of production, according to the ICEA status report submitted to the Ministry of Electronics and IT on May 11.

 

While almost all mobile phones sold in India are made in the country, the manufacturers are required to import several components.

"Supply Chain companies of these companies are facing challenges for approval from authorities. Without the commencement approval for supply chains, manufacturing of mobile phones cannot continue," the report said.

ICEA said only 15-30 per cent manpower has been allowed to work in the factories. Besides labour availability, inter-district movement of the workforce to factory premises is an issue due to government restrictions, it said.

"Also, interstate travel is a challenge, for example labour and staff from Haryana/Delhi to Noida," the report added.

Apart from the rise in international freight rates, there has been an increase in cost of domestic transportation due to the recent hike in fuel prices, the report said.

Recently, states like Delhi and Uttar Pradesh hiked petrol and diesel prices.

The industry body said the red zones account for around 80 per cent of total mobile devices turnover but their sale is barred in these areas.

It also said district magistrates are allowing market complexes to open in orange zones depending on the situation.

"65 per cent of retail stores can be operational but these places only contribute to 35-40 per cent of value of Offline retail.

"Non availability of e-commerce and retail in red zones is limiting the access of mobile devices to approximately 35 crore people. These comprise 80 per cent of the value market," ICEA said.