Seminar by Prof Sunil Mani: 22 Aug., 2019
A seminar titled “History does matter, India’s efforts at developing a domestic mobile phone manufacturing industry,” was delivered by Prof Sunil Mani, Director, CDS at the Joan Robinson Hall, on Thursday, 22 August, 2019.
Abstract: India has the second largest subscriber base for telephones and the second highest number of Internet users in the world. Over 98 per cent of the telecom subscribers use imported mobile phones given the fact that India has no major domestic mobile phone manufacturers, this growth in demand has been serviced through imports of mobile phones from abroad. Increased imports of mobile phones have contributed to a widening of India’s trade deficit. In order to reverse this, the government has put in place a number of policy instruments to incentivize the domestic manufacturing of mobile phones. The paper undertakes a critical analysis of the empirical evidence available to see how far this policy has succeeded in creating and growing a domestic mobile phone manufacturing industry. The ensuing analysis shows that there has been indeed a spike in domestic manufacturing of mobile phones leading to significant reductions in its imports. However it is also shown that the domestically manufactured phones are dependent, crucially, on imports of parts making the industry highly import-dependent. This high import dependence itself is actually a logical outcome of the weak innovation capability in the domestic industry. The analysis once again shows that history does matter in developing technological capability in high technology industries as present domestic manufacturing capability is a function of past innovation capability.