Since the government launched its local manufacturing push through the Production-Linked Incentive (PLI) scheme for mobile phone manufacturing, approximately half of the production capacity has been underutilised or used to make other products. This is majorly due to the weak demand globally and domestically, reported The Economic Times.
Since 2022, when the post-Covid pent-up demand began to decline, underutilisation has been significant.
According to Counterpoint Research, India's annual capacity exceeded 500 million units at the end of 2024. This includes smartphones, feature phones and tablets. The Electronic Industries Association of India (ELCINA) estimates the production capacity to be 400-420 million units. However, India is just producing about 250 million units.
According to research firm CMR, feature phone shipments fell 14% year over year in the July–September quarter of 2024. Shipments of 4G feature phones fell 46%, which was the main cause of the decline. Sales of 2G feature phones also fell by 1%, indicating a fall in the market for entry-level mobile phones.
According to The Economic Times, having unused capacity is advantageous for a product with significant future growth potential. India's utilisation rates will probably increase due to a boom in demand anticipated in international markets starting in 2025.