Getty ImagesNEW DELHI: Smartphones imports in June rose to a 3-year high at Rs 2225.2 crores by value, nearly six times from May and manifold from the measly Rs 5.6 crore in February, after which the battle with the pandemic unleashed local production constraints even after two months of the easing of the lockdown, data from ministry of commerce showed.
Market experts expect the imports to soar even higher for July as the rollover impact of the 10-day backlog caused by customs scrutiny of imports of phone parts in the last week of June caused a near washout in production for Chinese brands like market leader Xiaomi, Vivo, Oppo and Realme, who dominate the world’s second largest smartphone market.
“High import volumes in the bygone quarter have originated from multiple circumstances bothering smartphone brands,” said Tarun Pathak, associate director at Counterpoint Research.
“The 40-day lockdown was a complete washout for production while Unlock 1.0 in May began with the government allowing only 30% workforce in factories. Then there were import shocks, distribution issues due to regional lockdowns, migration of workers back to their hometowns (especially from North India), production halt due to Covid spread and a few anti-China protests outside factories.”
Experts said all disruption coincided with surging pent-up demand, forcing brands to import and China had already ramped up production quickly by then.
To address the high pent-up demand among consumers, phone companies resorted to imports of Completely Built-up Units (CBUs) which attract 20% import duty, hurting margins on hardware, which are as low as 5% for popular affordable devices. Increasing imports further means major revenue downside for smartphone brands going forward, analysts said.
As per industry estimates, 95% of all phones sold in India were assembled locally before Covid-19 disruptions, which saw imports suppressed to a low of Rs 5.6 crore in February.
On a quarterly basis, April-June saw the steepest surge ever in imports to Rs 3039.2 crore from Rs 154.2 crore in January-March. Around 92% of these imports are shipped from China and Vietnam, data showed. Conversely, exports in the April-June period fell 40% sequentially to Rs 1224.3 crore.
Counterpoint, though, expects import volumes to continue trending higher in coming months.
Local assembly plants of major smartphone brands including Vivo, Oppo, Realme, OnePlus and Samsung lie in the Noida belt in North India, while those of Xiaomi and Apple are concentrated in the South. ET had reported that Vivo is still operating at 70% capacity while Realme said it is expecting to reach 80% capacity next month. Oppo, Realme and OnePlus, all BBK group subsidiaries share the same manufacturing plant in Greater Noida.
Market experts expect the imports to soar even higher for July as the rollover impact of the 10-day backlog caused by customs scrutiny of imports of phone parts in the last week of June caused a near washout in production for Chinese brands like market leader Xiaomi, Vivo, Oppo and Realme, who dominate the world’s second largest smartphone market.
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“The 40-day lockdown was a complete washout for production while Unlock 1.0 in May began with the government allowing only 30% workforce in factories. Then there were import shocks, distribution issues due to regional lockdowns, migration of workers back to their hometowns (especially from North India), production halt due to Covid spread and a few anti-China protests outside factories.”
Experts said all disruption coincided with surging pent-up demand, forcing brands to import and China had already ramped up production quickly by then.
To address the high pent-up demand among consumers, phone companies resorted to imports of Completely Built-up Units (CBUs) which attract 20% import duty, hurting margins on hardware, which are as low as 5% for popular affordable devices. Increasing imports further means major revenue downside for smartphone brands going forward, analysts said.
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As per industry estimates, 95% of all phones sold in India were assembled locally before Covid-19 disruptions, which saw imports suppressed to a low of Rs 5.6 crore in February.
On a quarterly basis, April-June saw the steepest surge ever in imports to Rs 3039.2 crore from Rs 154.2 crore in January-March. Around 92% of these imports are shipped from China and Vietnam, data showed. Conversely, exports in the April-June period fell 40% sequentially to Rs 1224.3 crore.
Counterpoint, though, expects import volumes to continue trending higher in coming months.
Local assembly plants of major smartphone brands including Vivo, Oppo, Realme, OnePlus and Samsung lie in the Noida belt in North India, while those of Xiaomi and Apple are concentrated in the South. ET had reported that Vivo is still operating at 70% capacity while Realme said it is expecting to reach 80% capacity next month. Oppo, Realme and OnePlus, all BBK group subsidiaries share the same manufacturing plant in Greater Noida.
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