Mumbai: Reliance Industries Ltd. has asked local suppliers to ramp up production capacity in India so they can make as many as 200 million smartphones over the next two years - a potentially enormous boost for the country's technology ambitions and a warning shot to rivals such as Xiaomi Corp.
India's most valuable company is in talks with domestic assemblers to make a version of its Jio phone that would run on Google's Android and cost about 4,000 rupees ($54). The inexpensive phones will be marketed with low-cost wireless plans from Reliance Jio.
Reliance Chairman Mukesh Ambani is aiming to remake the country's smartphone industry much like he did in wireless services, where his aggressive prices and simple plans quickly made him the dominant force. The billionaire is also aligning himself with the Indian government's plans to build more domestic manufacturing, a possible boost for local assemblers like Dixon Technologies India, Lava International and Karbonn Mobiles.
Can make it happen
"We are of course trying to build our domestic companies. We have a sweet spot in entry level phones," said Pankaj Mohindroo, chairman of the India Cellular & Electronic Association, said. "The world has realized that India is a great place to do business and a great place to do manufacturing also."
Reliance's target of selling 150 million to 200 million phones over two years would represent a massive boost for local factories. India assembled an estimated 165 million smartphones in the year ended March, and about an equal number of basic feature phones, according to Mohindroo's association. About a fifth of the smartphones cost less than 7,000 rupees, or about $100.
Reliance rival Bharti Airtel is also in talks with assemblers to build its own 4G device, local media has reported. The Business Standard reported earlier that Ambani was considering outsourcing phone-making.
Many of Jio's nearly 400 million users use no-frills second-generation devices, paying $2 monthly for voice and data - a large potential market for the new device. It could eventually erode the market share of Chinese phonemakers such as Xiaomi.
"Jio has an opportunity to target more than half billion Indians who don't own a smartphone and trigger a blue ocean market opportunity," said Neil Shah, research director at Counterpoint Research. "With Reliance expected to work with Indian vendors, Chinese brands will lose out on a potential opportunity and market share."