Micromax to invest ₹500 crore in R&D, manufacturing backed by India's PLI scheme

NEW DELHI: Home-bred handset maker Micromax plans to invest Rs 500 crore on expanding local manufacturing and research and development (R&D) operations as it plots a comeback in India’s smartphone market, backed by the government’s production-linked incentive (PLI) scheme, its top executive said. Speaking to ET, co-founder Rahul Sharma said that the government’s incentives will help the home-bred handset maker compete effectively with Chinese rivals who dominate the market now with over 70% share. Micromax, which at its peak in 2014 rose to No. 2 in smartphones, has practically been wiped out of the market by the Chinese onslaught, which began to take shape in 2016.

“The new PLI scheme balances out foreign and Indian players. The support of 6% is a big support. With the government support, we will be able to fight Chinese brands fiercely on the pricing front,” Sharma said. “Internal accruals are good for the plan… I will raise money at the right time.” The co-founder also called for stricter data localisation, saying that merely storing data locally doesn’t solve the problem as companies can still use this data to train artificial intelligence and bots in China.

“All this data is going to China despite them saying we have local servers. The US has realised that all data is going to China, thereby the recent steps… everything needs to be in India and that should be the priority,” Sharma said. Micromax had decided to exit the smartphone space two years back because it couldn’t compete on pricing front with Chinese handset brands that flooded the market with affordable handsets backed by fat marketing budgets. “PLI is going to solve the pricing for us and is allowing us to make a grand comeback,” Sharma said.

Micromax has been selling feature phones in India since its exit from the smartphone market. It, however, makes mobile handsets for other brands as a contract manufacturer. The company’s investment coupled with the PLI scheme benefits will help it grow its export business as well. It provided smartphones to US telecom operators in 2019. “We have identified global markets.”

Sharma said that handset brands can already source 60% material locally for mobile handsets as the phased manufacturing programme helped the ecosystem to grow in the country. “The idea is to involve local MSMEs to further increase the local sourcing of components for smartphones,” he said, adding that the company will work with other local handset brands to bring component ecosystem players to India and there will be more synergies. The company will match the smartphone specifications and pricing offered by Chinese brand, he said, adding that Micromax will not be required to spend marketing dollars like Oppo and Vivo. “I know how to make a product… that’s my expertise… once I give competing products and at the same pricing, then the customer will buy.”

Micromax to invest ₹500 crore in R&D, manufacturing backed by India's PLI scheme Micromax to invest ₹500 crore in R&D, manufacturing backed by India's PLI scheme Reviewed by TechCO on 8/14/2020 Rating: 5

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