Lava to shift operations from China to India; plans to invest Rs 800 crore

The Indian smartphone maker, Lava is shifting to its China manufacturing plant to India. The company plans to invest Rs 800 crore in ramping up a manufacturing facility in the country.

The COVID-19 outbreak and extended lockdown have forced companies around the world to reconsider shifting manufacturing out of China. The US-China trade war has further accelerated this movement. The smartphone makers rely on China for manufacturing as its cost-effective. These brands are looking at India as an alternative.

Lava’s China team consists of 600-650 employees. The company exports part of the mobile phones from Chinese facility to the entire world. This will now happen from India. Lava has been able to meet the export demand during the lockdown.

The company has recently shifted designing to India. The sales requirement for India is met by the local plant. Hari Om Rao, Lava’s Chairman and Managing Director said, “My dream is to export mobile devices to China. Indian companies are already exporting mobile chargers to China. The production linked incentive scheme has ended our disability factor vis-a-vis export from China. Therefore entire operations will now be carried from India.”

Lava will invest Rs 800 crore over the next five years to scale up operations. The mobile phone production has surged by 8x in India. In 2019-29, the smartphone production demand was Rs 2 lakh crore. This demand can easily be met through domestic production.

The Indian government is aiding the efforts by announcing incentives schemes. Three new schemes totalling incentives of Rs 48,000 crore will boost local manufacturing and create 20 lakh direct and indirect jobs over the next five years. The production-linked incentive scheme (PLI) will help manufacturing companies gain 4-6 per cent incentives over incremental sales of goods.