India’s smartphone market has great growth potential
In the last part of this series, we discussed how despite India’s falling Global Competitiveness Index, Foxconn has announced its intention to invest $5 billion in India over the next five years. The main reason why it has gone ahead with the decision is India’s rapidly growing smartphone market. India has the fastest growing smartphone market. It could overtake the US smartphone market by 2017, according to a report from Strategy Analytics.
Recently, India raised taxes on imported mobile devices from 6% to 12.50%. This is why Foxconn is interested in manufacturing mobile phones locally. Another possible reason why it’s keen to invest in India is that it wants to lessen its dependency on China. It faces higher costs due to rising labor wages.
Higher costs are also a reason why Foxconn hasn’t invested its promised sum in Brazil and Indonesia. It intended to invest $12 billion in Brazil and $10 billion in Indonesia, but it ended up investing much less in those countries.
Foreign players are keen to invest in India’s smartphone market
The growth potential of India’s smartphone market is attracting many foreign players to invest there. Alibaba (BABA) was reported to be investing in the Indian smartphone player Micromax. Apple (AAPL) has traditionally been a smaller player in the Indian smartphone market. It has plans to double the iPhone sales in India in each of the next three years, according to a report from Times of India. In this regard, it recently signed a deal with Optiemus Group—a smartphone distributor in India.
Microsoft (MSFT) has also increased its investments in India. According to Counterpoint, the Microsoft Lumia line of smartphones had a great quarter ending in March in India when its sales grew by a YoY (year-over-year) rate of 20%.