Lava is looking to capitalize on the new PLI schemes for electronics announced by the government by offering its manufacturing capabilities to other companies and earn subsidies. The first major beneficiary is now confirmed to be Nokia.
The Make in India initiative has had a big impact on how the smartphone industry has taken shape over the last few years. In a bid to encourage local manufacturing and assembly, the government offers subsidies to companies that do and subjects imports to a 20% duty. While the bigger companies set up their own facilities in India, the capital expenditure is a little too big for some others. Without investing in India they would be subjected to the aforementioned import duties which would make their products more expensive. Needless to say, that would be undesirable in a price-sensitive market.
In a statement to Economic Times, Hari Om Rai, chairman and managing director of Lava confirmed that all Nokia phones being sold in India currently are by Lava. All the agreements are also in place to combine their supply chains. “We have plans to partner with companies that can share supply chains. We are making smartphones for Motorola and Nokia [HMD Global].”
Another source added that all three telecom operators in India are considering creating co-branded smartphones with Lava but will be subsidised by the telco. The discussion is supposedly in advanced stages with one of them. Out of the lot, Reliance is the only one that currently sells phones, in the form of its JioPhone series. In the future, it plans to enter the affordable 4G smartphone market with phones that will be made in partnership with Google.
Along with the Indian market, Lava is also looking to work with companies outside of the ecosystem to combine supply chains more effectively. A big chunk of its Rs 5,269 cr revenue in FY 2019-20 did come from overseas clients. Some of the notable ones include AT&T and General Electric. To better cater to this demand, it has also increased its production capacity to 30 million smartphones and 45 million feature phones.
Lava is the second-largest feature phone maker in the country. Additionally, it is also trying to grab a piece of the sub Rs 10,000 Android smartphone segment.