Adding value to Indian mobiles

N RECENT DECADES, manufacturing industries around the world have been riding the wave of international production networks to achieve an unprecedented expansion in production and trade worldwide.

- ANWARUL HODA NEHA GUPTA

These networks, also known as global value chains, have sprung from production-sharing arrangements across international borders among units producing goods and services. The phenomenon has been facilitated by three interrelated developments in world trade and production of goods—coordinated action by governments to eliminate and reduce tariff and non-tariff barriers to trade in goods, technological developments resulting in a steep reduction in the time taken for transportation of goods and advances in communications that made it possible to monitor and control production taking place in diverse geographical regions from one location.

The rise of the Indian mobile phone industry Although India was largely untouched by the global value chain revolution and overall, remained a laggard in manufacturing among emerging economies, the government decided to seize the moment and spark up the electronics industry in the country, particularly the mobile phone industry. It enhanced tariff protection for the product through the phased manufacturing programme and put in place an ambitious production-linked incentives (PLI) scheme, providing a subsidy of 4-6% on incremental sale. These initiatives clicked with a strong rise in the demand for mobile phones, both in India and abroad, to give a boost to the industry.