India is a country which is young and ever-ready for the business of all kinds. The country with 1.3 billion people is a marketplace for anything you have. There is a place for everyone on the Indian soil, without any complications, however, the only thing one must know before entering the Indian market is the consumer they are targeting. Most of the times, the companies that enter India consider to target the Indian audience of 1.3 billion as a whole which is not the right way to go about.
The Indian population can be widely divided into many categories. The companies coming in must understand which category they are targeting and only then can a business be successful in India. There is a market, however, in India, which is going in the opposite direction to that of the world. I am talking about the smartphone market in India. This market is going in the upwards direction while the world market is stagnating.
This has a lot to do with the governments change in the tactics. The current government wants every major smartphone company to manufacture in India. Now manufacturing in India has different types to it. One is where you manufacture the simple parts, like the body of the phone, and import the complex parts like PCB’s, motherboards, chipsets and things like that.
Now, to understand how the Indian government played a neat game, you need to know that before the Chinese invasion of smartphone companies, India had many homegrown companies. Those companies had a simple strategy, they were buying tier 3 and 4 phones from China, putting their brand name on it and selling them in India. This strategy even made Micromax the biggest seller in India.
However, the Indian government, in order to achieve its make in India goal, levied heavy duties on the import and lessened the tax on import of the components of the phone. This made the foreign companies like Samsung, Xiaomi, Oppo, Apple and many more, set up their plants in India to assemble the phones in India by importing the components; step one – check.
Now the import duty on simplified parts was high but on complex parts was low, so the companies started manufacturing the simple parts in India and importing the complex parts; step two done. At this moment, the Indian government is implementing the third step which is increasing the import duty on the complex parts like chipsets and PCB’s so that the phones are made in India from scratch.
This is called the Phased Manufacturing Program (PMP). PMP has increased the number of sales in India and the reason for it is that the prices have drastically gone down and the internet revolution has also helped. The companies are coming in India with massive manufacturing plants creating thousands of jobs within a year.
Many companies are moving their manufacturing plants from China to India, the reason for this is the increasing labor costs. The labor costs in China have increased three-fold which has caused a lot of companies to move their plants to Korea or India. India is massively helped with the technology coming from outside of the country. There are companies like SignalChip coming into existence while, companies like Vivo and Xiaomi are also setting up complex part manufacturing, there is a wide possibility of a homegrown company to rise from the dead. However, the chances are bleak as it is too late for any newcomer to come and have a market share in the smartphone market.
That being said, the reason behind India’s growth and massive potential is smart and patient governance. There is also another reason and that is the young workforce amongst the 1.3 billion people in India.