BackDisplay localization to boost local value addition amid ramp-up in talks
Displays account for 20% of the cost of products. That leaves the scope wide open for India to ramp-up domestic value addition through indigenously made and exported displays.
PremiumMumbai: India is making a concerted effort to ramp up local display manufacturing for digital gadgets such as smartphones, laptops and television sets.
India accounts for 7% of the global display revenue as the third-largest consumer market. The push is being led by the Ministry of Electronics and Information Technology (Meity), which is working with industry stakeholders to urge ramping up of display assembling and full-fledged manufacturing efforts.
Industry veterans state that this could boost domestic value addition in ‘made in India’ products, including smartphones, both for being sold in the local market as well as in exports—since display accounts for a significant part of a product’s ‘bill of materials’ (BoM) cost.
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“Displays account for up to 20% in BoM cost, which is close to logic chips, memory and other semiconductors. But, we have not been able to break ground beyond display assembly in India so far. The key challenge is not the high cost of setting up display fabs—moreover, local manufacturers in India will need to find the right technology partner and sign transfer of technology agreements to be able to bring full-scale local display manufacturing and fabrication units, or fabs," said Pankaj Mohindroo, chairman of industry body, India Cellular and Electronics Association.
Attracting tech partners
Mohindroo added that the Centre’s production-linked incentive (PLI) schemes could further boost global technology partners to look at India more seriously, and offer an attractive market to consider.
“China has scaled the overall cost of display units to the lowest on offer globally, because of the expanse of its display manufacturing and assembly industry. For Indian players, it is now about finding the right partner, and also finding the right sales channels for local and global markets—only then can the local push amount to substantial benefits for the overall industry," Mohindroo further added.
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While the Centre already offers a PLI scheme for both semiconductor and display fabs under the India Semiconductor Mission (ISM), a senior government official, who requested anonymity, confirmed to Mint that the latter only takes into consideration applications for a full-scale display manufacturing facility.
“Any assembly unit will fall under India’s ‘SPECS’ (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors) scheme—and will be treated separately. We have received applications for display fabs, and the ISM’s considerations will be to set-up a full-scale facility that will also help boost India’s overall display components supply chain," the official further added.
Granular ‘incentivizing’
A second official said that the Centre is in active consideration of “granular" incentivizing of electronics components to help build a more attractive supply chain, subject to the outcome of the ongoing seven-phase general assembly elections in the country. “The component incentives will work completely separately from the broader PLI scheme for display fabs—the latter is what we as a country are more interested in," the second official added.
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A senior executive at one of India’s top electronics and electrical manufacturing firms, which makes a wide category of devices for a broad-based range of consumer brands, told Mint under conditions of anonymity that talks have been ongoing to set-up more display assembly facilities at a larger scale. “Most talks have so far been at an industry level, and we haven’t really struck any concrete deal that can be spoken about at the moment. But, there is talk from the Centre’s end, and there is a push to ramp-up localization of the display industry," the executive further said.
On 22 May, fellow industry body Manufacturers Association of Information Technology (MAIT) also wrote to Meity, urging prioritization of incentivizing components manufacturing in the country. Such a move, the body’s letter said, should “not only boost exports, but also foster large-scale production capacity in the industry, and attract investments from overseas," the body’s letter to Meity read.
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Each of these incentives, industry experts state, could boost domestic value addition as an end-goal. Navkendar Singh, associate vice-president at market research firm International Data Corporation (IDC) India, said, “Localization of display manufacturing can definitely generate incrementally higher domestic value, and that should be our goal anyway—China’s electronics model became successful because of domestic value addition."
“There are many legacy industries that still rely on LCD and TFT displays, which are what is being assembled in India. While this clearly makes little impact in terms of local value addition from a smartphones or other consumer electronics industry standpoint, it’s important to understand that we cannot expect the likes of BOE, Panasonic and Sharp to start making OLED panels in India overnight. On that note, incentivising local displays is a step in the right direction—you have to start somewhere to get somewhere. But, any realisation of local value input from display-making will only come in seven to 10 years, since facilities will take time to be made, and then ramp-up in production and distribution," he added.
Singh, however, further said that current display assemblies are largely working on making LCD and TFT panels. “Our latest consumer devices have moved on to LED, OLED and AMOLED screens. How this moves the domestic value addition needle will be a long-term play that’ll depend on multiple factors," he said.
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