Wednesday 23 June 2021
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Lava to move operations from China to India

According to the company, the “cost disadvantage" Lava had as compared to China is eliminated by the PLI scheme

Indian smartphone manufacturer Lava has said it will shift the production base of all of its phones meant for exports to India from China. The company will also shift its design centre to the country, according to a report in Business Standard newspapers.

The company plans to invest Rs 800 crore over the next five years to scale up its mobile phone development and manufacturing operations in the country. “We had around 600-650 employees in China for product design. Now we have shifted designing to India. Our sales requirements for India were met from our local plant. “We used to partially export mobile phones from China to the rest of the world, which will now happen from India,” Lava International Chairman and Managing Director Hari Om Rai said.

During the lockdown period, Lava met its export demand from China. “My dream is to export mobile devices to China. Indian companies are already exporting mobile chargers to China. The production linked incentive scheme has ended our disability factor vis-a-vis export from China. Therefore entire operations will now be carried from India,” Rai said.

Also read: Apple to move part of FDI in China to India if PLI suits it

The move is thanks to the government’s new production linked incentive (PLI) scheme for mobile manufacturers in the country. Industry executives say that it gives manufacturers here a 6% cost advantage, something they didn’t have earlier. According to the company, the “cost disadvantage” Lava had as compared to China is eliminated by the PLI scheme.

Recent reports also suggest that iPhone giant Apple is planning to move much of its manufacturing to India in the next five years. The company is expected to export smartphones up to $40 billion from the country, after moving about a fifth of its production here.

also read: Sitharaman announces ‘One Nation One Ration Card’ by March 2021

The government in April notified three schemes involving total incentives of around Rs 48,000 crore to boost local electronics manufacturing and create 20 lakh direct and indirect jobs by 2025.

The notification included production linked incentive scheme (PLI). Under the scheme, electronics manufacturing companies will get an incentive of 4 – 6 per cent on incremental sales (over base year) of goods manufactured in India and covered under target segments over a period of five years.

The production of mobile phones in the country has surged eight-times in the last four years, from around Rs 18,900 crore in 2014-15 to over Rs 2 lakh crore in 2019-20. The country’s demand is almost completely met through domestic production.

The government estimates that through the PLI scheme, domestic value addition for mobile phones is expected to rise to 35-40 per cent by 2025 from the current level of 20-25 per cent and generate additional 8 lakh jobs, both direct and indirect.

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