SUMMARY
The current move indicates a cautious approach to direct investments in plant capacity expansion
Vivo and Realme have started producing some handsets in a Karbonn-owned plant
Dixon is in the final stages of signing contracts with Oppo and Vivo for manufacturing, according to sources
Chinese mobile phone maker BBK Group has partnered with Indian manufacturers Dixon Technologies and Karbonn Group for the production of its Oppo, Vivo and Realme smartphones.
This is partly due to pressure from the government to engage with local players and benefit from the production-linked incentive (PLI) scheme for phone manufacturing, ET reported, citing sources close to the matter.
Oppo and Vivo already have large manufacturing units in India and these make the entire range of BBK Group brands, such as Oppo, Vivo, Realme, OnePlus and iQoo.
The move comes despite the Indian government’s crackdown on Chinese smartphone companies in the past. Now, these firms are cautious about directly investing in their own plants for capacity expansion after increased scrutiny in the last few years, ranging from alleged customs duty and income tax evasion to money laundering, the report said.
Their bank accounts had also been frozen, forcing them to take legal recourse to ensure business continuity. Investigations are underway.
Chinese companies came under pressure in India following the escalation in border tensions a few years ago.
Vivo and Realme have started producing some handsets in a Karbonn-owned plant. Meanwhile, Dixon is in the final stages of signing contracts with Oppo and Vivo for manufacturing, the report added.
Currently, the monthly production capacity for Vivo and Realme in the Karbonn plant is around 1 Mn units, while Dixon’s production will start at a lower level.
Oppo and Vivo, not having applied for PLI benefits, are teaming up with contract manufacturers who have received these incentives. This strategic move aims to boost competitiveness, especially with Samsung benefiting from the PLI scheme.
In the fiscal year 2022-23, BBK Group retained its lead in the Indian smartphone market, earning revenue of INR 81,870 Cr.
The development comes at a time when Apple is rapidly ramping up manufacturing in India amid geopolitical tensions between Beijing and Washington. India now accounts for about 7% of total iPhones produced globally.
Apple started ramping up production in India in 2021 amid disruptions in its supply chain due to the COVID-19 pandemic restriction in China and rising tensions between Beijing and Washington.
Apple manufactured iPhones worth INR 1 Lakh Cr in India last year.
Apple’s India business has recorded a revenue of INR 49.3K Cr (almost $6 Bn) in FY23. According to RoC filings, Apple India generates 94.6% of its revenue from sales of products and 5.4% from maintenance and services.
Meanwhile, continuing with its Indian expansion spree, Apple has unveiled a new 15-floor office in the country’s Silicon Valley, Bengaluru.
