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Who is winning the smartphone exports race – Vietnam or India: Data

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Workforce assembles mobile handset at a facility near Hyderabad

Workforce assembles mobile handset at a facility near Hyderabad
| Photo Credit: Mohammed Yousuf

In recent times, India has laid much emphasis on smartphone exports. In November 2022, Prime Minister Narendra Modi lauded phone exports as they crossed the $5 billion mark. At the 2023 India Mobile Congress, Mr. Modi said “soon the whole world will be using made-in-India phones”. The government credited the Production Linked Incentive scheme for major smartphone companies shifting their suppliers to India. These were in line with the ambitious target set in the National Policy on Electronics 2019, that India will be exporting 600 million mobile phones worth $110 billion by 2025.

With barely a year left for this goal, India’s smartphone exports are hovering below $10 billion a year, just a fraction of the target. While India continues to manufacture a significant number of smartphones, most of it is consumed domestically. Recently, Reuters reported on a letter and a confidential presentation drafted by the IT Ministry earlier in January this year, in which, Minister Rajeev Chandrasekhar had expressed his concerns about India losing out to China and Vietnam due to high tariffs on import of mobile components.

The Indian government reduced import duty on mobile parts such as lenses, battery and back covers from 15% to 10%, by January-end. However, India continues to impose a 20% tax on chargers and circuit boards.

The IT Minister’s apprehensions are borne out by the data. In particular, Vietnam attracted many firms which were looking to reduce dependency on China. While China continues to dominate, Vietnam has eaten into its export share steadily over the years, taking over from South Korea as the second-biggest smartphone exporter.

Both India and Vietnam had less than 1% export share before 2010. By 2022, Vietnam’s share rose to 12%, while India ranked seventh with a little over 2.5% export share (Chart 1). While China continues to form the lion’s share by exporting half of the world’s smartphones in 2022, the consistently upward trend it witnessed before 2015 is not seen anymore. Hong Kong, UAE, the Czech Republic, the U.S. and South Korea are other players in the export market.

Chart 1 shows the country-wise share of smartphone exports.

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Vietnam’s staggering rise can be attributed to its fast-paced growth in the U.S. smartphone market which is the biggest importer of mobiles. Between 2018 and 2022, Vietnam’s share in U.S. smartphone imports doubled from 9% to 18% as shown in Chart 2. It has also marginally improved its share to 1% in Hong Kong’s smartphone imports — the world’s second biggest importer — where India’s share is insignificant. Japan, the world’s fourth biggest importer, gets 6% of its imported smartphones from Vietnam, close to three times more than India’s share.

Chart 2 shows the dependence of major smartphone importers. Data is presented for the top five importers of smartphones. Figures in %.

However, in UAE and Germany — the world’s third and fifth biggest smartphone importers —Vietnam’s share in imports is decreasing and in both these countries India’s share is growing. India’s share in UAE’s smartphone imports increased from about 5% in 2018 to over 13% in 2022, while Vietnam’s declined from 31.8% to 13.5%. In Germany, Vietnam’s share declined from about 20% to 10% in 2022, while India’s increased to about 5% from a negligible share in 2018.

Within India, Tamil Nadu leads smartphone exports with close to 38% of India’s mobiles being sent out from Kancheepuram as shown in Chart 3. Gautam Buddha Nagar of Uttar Pradesh and Kolar in Karnataka are other districts leading in smartphone exports.

Chart 3 shows the share of States and districts in India’s smartphone exports between FY23 and FY24(April to November). Figures in %.

Source: UN Comtrade, ITC Trade map, and Ministry of Commerce and Industry

Also read: Explained | The debate over India’s smartphone manufacturing dreams

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