Lenovo/Motorola will make India an export hub and target the Rs. 10,000-20,000 segment
Lenovo-owned Motorola, which sparked the shift to smartphones in India with its first Moto G smartphone, is now reduced to the 12th spot on the leaderboard. This due to the cut-throat competition from Chinese peers including OPPO, Vivo, as well as the current leader of the Indian smartphone market – Xiaomi. The Chinese players, especially Xiaomi, have been able to take the lead by establishing a strong manufacturing and distribution channel in India, which helps them reap tax benefits under government’s “Make in India” initiative. Now, Lenovo-Motorola is planning to take a similar route to success and has announced its plans to establish India as its export hub.
Starting the end of April 2019, Lenovo-Motorola will start exporting smartphones to regions such as Latin America – one of Motorola’s major markets – as well as the Asia Pacific. Lenovo will now focus primarily on the segment of smartphones priced between ₹6,000 and ₹20,000. Motorola, on the other hand, will have a more focussed approach, catering to only ₹10,000-₹20,000 segment.
Prashanth Mani, the head of Lenovo’s mobile business in India and Motorola Mobility’s managing director, told The Economic Times that the group is currently capable of producing 12 million units per year. Apart from this, a large investment will be going into this business to scale it up in terms of volume on the basis of demand.
Mani noted that the Indian smartphone market is witnessing similar turbulence due to “price games” as we saw in the telecom industry with the entry of Reliance Jio a few years ago. “We are not in the volume and value-share fights,” he said, noting that the objective right now is to make Motorola profitable. Apart from assembling smartphones, Lenovo-Motorola will be assembling Printed Circuit Boards (PCBs) in India as well as making batteries and chargers locally in partnership with Flex Ltd. – which also manufacturers smartphones for Xiaomi.
Hailing OnePlus, the executive said that in order to reap profits, a company must focus on the mid-range and sub-premium segments and a leaner catalog. He added that Lenovo-Motorola has streamlined its lineup so as to achieve efficiency in production.
Import duty exemption for exporters of electronic goods
Among the various initiatives by the Indian government that incentivize local production and export of goods, Export Promotion Capital Goods (EPCG) Scheme allows manufacturers of electronic products to import raw material and goods essential for production at zero import duty. To reap the benefits of the scheme, manufacturers must export products worth at least six times the duty saved on the import of pre-production goods (including software). These exemptions might help Lenovo-Motorola to cut down on some of the losses and be motivated to make profit.
Source: The Economic Times