Demand for mobile handsets in India, the world’s second largest telecom market after China, will reach 350 million a year by 2020, and 505 million handsets will be made in India that year, according to a joint study.
Produced by India’s Federation of Indian Chambers of Commerce and Industry and professional services firm Ernst & Young, the report, titled “Mobile Handsets: Providing Mobility to Every Indian,” also said the average selling price of handsets in India will rise to $60 by 2020, compared with $47 in 2010.
“The affordability of feature-rich handsets is also expected to be a key enabler of handset adoption. In addition to feature phones, smart phones are expected to lead the handset growth story in India,” the report said.
“One of the primary drivers of the sector is an increase in average household communication expenditure. The untapped rural market is expected to provide handset players the next phase of growth,” the report said. “The number of 3G subscribers expected to cross 300 million by 2020, fueling the growth of 3G enabled handsets.”
A policy and regulatory initiative conducive to handset manufacturing in India is expected to drive sustainable growth in that segment, the report said.
“Telecommunications is one of the main architects of accelerated growth and progress of different segments of the economy. Removing barriers to information dissemination are prerequisites for promoting equitable and sustainable development as well as political and social cohesion,” said Prashant Singhal, telecom industry leader at Ernst & Young.
“The enhanced access to wireless services is the outcome of positive regulatory changes, intense competition among multiple operators, low-priced handsets, low tariffs and significant investments in telecom infrastructure and networks,” Singhal said. “Still, there is a need of strong policy intervention to overcome the barriers and enable India in becoming the largest telecom market in the world, ahead of China.”
“The mobile handset’s reach and simplicity of usage would help overcome barriers of illiteracy and communication in India,” said Virat Bhatia, chairman of the Indian commerce agency’s Communications and Digital Economy Committee. “Today, the mobile handset is already being used for banking transactions, making payments, acting as an educational and multimedia tool, spreading governance and information dissipation platform across verticals such as agriculture and health care.”
Some of the key recommendations endorsed by the report for the mobile handset sector in India:
- Setting up handset manufacturing cluster parks would foster a sustainable ecosystem in India for handset manufacturing.
- Research and development should be focused on handset designing and manufacturing. In turn, this would facilitate innovation and intellectual property rights creation and accelerate commercialization.
- The government should create a sizable export promotion fund for the Telecom Equipment and Services Export Promotion Council to help increase exports to developing nations.
- There should be a uniform value-added tax rate applicable across the country. In the upcoming goods and services tax regime, handsets should be taxed at a uniform rate of 4%.
- A central electronic identity register for monitoring of International Mobile Equipment Identity numbers should be established, keeping in mind the growing importance of national security.
- The International Commission on Non-Ionizing Radiation Protection Association safety guidelines should be adopted for specific absorption rate standards, a measure of the radio frequency exposure.
- All government websites should be accessible from mobile handsets, and a regulatory regime should be established for the delivery of m-governance initiatives.