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Can Smartphones Connect Indian Realty With Growth?

Can Smartphones Connect Indian Realty With Growth?

Can Smartphones Connect Indian Realty With Growth?
(toledoblade.com)

India has the distinction of offering multinationals one of the world's biggest consumer base. The country's urban population with its increasing purchasing power is luring global majors to set up shop here. The process to turn India into a global village started in the early 1990s when the government opened its gates to outsiders by unfolding economic liberalisation. Sixteen years later, the tag of being a great consumer base is not gratifying enough. We do not want to be consumers alone, we would like to be creators now.  India is now the world's fastest growing smartphone market but essentially we are sending the money out into the pockets of international tech giants who have set up manufacturing hubs in China, Taiwan etc Prime Minister Narendra Modi's Skill India and Make in India initiatives have yet to bear fruit.

Not that things are not looking up.

According to a Bloomberg report, "before the launch of Make in India, the country had only two phone assembly facilities and that number has now increased to about 50 facilities". "Eighty per cent of those are local companies and 10 per cent are each Chinese and Taiwanese. The plants assemble phones for the world's leading brands, including Samsung and Huawei Technologies Co," says the report.

On the other hand, according to a joint study by Counterpoint Research, a market research company, and the Indian Institute of Management-Bangalore, the country at present contributes about six per cent of the value of phones sold here through local assembly. If all goes well, the number could touch 30 per cent in the coming five years. The study also estimates over 180 million mobile phones will be assembled in India in 2016, accounting for 67 per cent of the total 267 million sold, an increase of 14 per cent as compared to 2014.

This growth in users and manufacturers of smartphones would certainly generate great employment opportunities. This in turn would help India's residential and commercial real estate to walk towards better growth.

In August earlier this year, Union Information Technology Minister Ravi Shankar Prasad said 37 mobile manufacturing companies had invested in India in the last one year, generating 40,000 direct jobs and 1.25 lakh indirect jobs. Foxconn's Sri City SEZ facility located at Tada in Andhra Pradesh which also manufactures handsets for Gionee and Xiaomi is a key driver for real estate demand in the area. 

Past couple of years have not been the most fruitful for India's real estate. A price rise that became the defining feature of property markets across major cities in the past two decades has been the reason why the country's real estate came to a standstill with the period beginning early 2014. The current government's excessive push towards making property affordable implies how unaffordable it has become during the period when prices only moved upwards. Laws were introduced – the Real Estate (Regulation & Development) 2016 – but, as it stands today, things are not moving fast enough. According to PropTiger DataLabs figures, home buyers have been exercising caution despite the many discounts on offer. 

Last Updated: Tue Dec 06 2016

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