Broadband India Forum (BIF) has released a report highlighting the challenges faced by the mobile handset manufacturing sector in India today. The report has been prepared in partnership with IIM Calcutta and Thought Arbitrage Research Institute (TARI).
The report highlights some significant issues affecting the mobile telephony and telecommunication equipment sector growth, taking a toll on Make In India. The fact is that the sectoral growth is largely driven by imports. According to the report, the share of mobile and other telecommunications equipment in the country's total import basket is increasing and currently stands at 26.4 per cent. The share of Chinese products in this basket is rising, from 64.3 per cent in 2012/13 to 69.4 per cent in 2016/17.
There is small manufacturing value added (MVA) by Indian manufacturers due to the high dependence on imported components. Another issue is that mobile technology innovators, who are also the Standard-Essential Patent (SEP) owners, have often held the view that they do not make sufficient economic gains for their investments in research and development (R&D). On the contrary, mobile manufacturers state that the royalty claims on use of licensed technologies is too high.
The study estimated the royalty yield by analysing the Intellectual Property Rights (IPR) revenues (earnings from IPRs in their annual report/filings) of 10 global companies, which includes major mobile technology innovators and licensors as a percentage of the mobile sales in the global setting. The R&D expenditure of the mobile license holders is in the range of 10.3 and 35.8 per cent of their total revenue, with a median of 21.9 per cent, which is among the highest when compared with other industries.
T.V. Ramachandran, President, Broadband India Forum, said: "With an increasing number of foreign manufacturers now manufacturing in India, Indian companies must be willing to step up their innovation and R&D efforts to remain competitive in their own market. India's domestic mobile handset manufacturers remain largely reliant upon the innovations and standards set up by the international players and organisations.By stepping up its innovative framework the Indian mobile industry will be better placed to contribute to the global standardisation process. This will also determine its role in the upcoming 5G ecosystem that promises to be truly transformational and one that the government intends to deeply integrate with the flagship Make In India programme."