NEW DELHI: The government should look at driving local value addition of components in mobile phone manufacturing, up to 30% in the next five years from present 6%, which will in turn help India become a manufacturing hub, as per a study from IIM Bangalore and research firm Counterpoint Research The report suggests that the next phase of Make in India, should be part of a phased manufacturing approach, as close to 1 billion smartphones and 500 million feature phones will be sold in the Indian market till 2021, involving consumption of mobile phone components worth $80 billion. The local value addition will also aid in reducing dependency on imports, the report released Monday revealed. Aruna Sundararajan , Secretary, Ministry of Electronics & IT said that there was plenty of work ahead on fronts such as tariff regime, skill development, design knowledge and creation of strong infrastructure to aid the formation of electronics manufacturing clusters."India can potentially be world leader in mobile phone manufacturing ecosystem and this has to be done in a phased manner," she said, adding that the government would have to work with local industry and several partners to achieve this.She also announced that the government was sending close to a 100 design engineers to Taiwan to learn important facets of aligning product design and customer needs from their Taiwanese counterparts.The study has proposed a three step local value addition plan, where the components under Phase I plan, from 2016-2018, like battery, chargers, cables, housing, packaging and others can be localized completely, thus driving the 'true local value addition' from current 6% to 17% in just two years. Components under Phase II plan, from 2018-2020, like display, camera and their sub components can further increase value addition from 18% to 32% by 2020.Phase III plan will include possibility of localizing the semi-conductor components post 2020 including setting up semi-conductor fab and thus driving the 'true local value addition' beyond 33%.India surpassed the USA to become the second largest global smartphone market in terms of users in early 2016, and on track to cross 500 million smartphone users within the next five years. This offers a huge opportunity in terms of domestic demand for making mobile phones in India and increasingly source components locally. The government has given incentives through M-SIPS and offered duty differential to companies making phones in India. During the last 18 months, 40 new mobile phone assembly units and 12 new component or accessory manufacturing units have started as part of the Make in India initiative. The government is of the view that mobile phones have the potential to create electronic manufacturing industry worth over $250 billion.The 'Maximizing Local Value Addition in Indian Mobile Phone Manufacturing' study, however said that the government should create effective duties on components and attractive incentives structures to bring suppliers to India, and push companies to fund research into research on 5G, robotics and software, to build local intellectual property.IIM Bangalore's Professor Chirantan Chatterjee, who looks at Corporate Strategy and Policy Area, "Under the proposed plan, we estimate that more than $15 billion worth components will be sourced locally over the period of five years through 2020, realising not only significant savings in foreign exchange, reducing the level of imports but also assisting the creation of over million direct and indirect jobs."While India is the second largest country in consumption of mobile phones globally, this plan can transform India into a global manufacturing exports hub adding further to the country's GDP and balance of trade, he added.Counterpoint Research estimates more than 180 million mobile phones will be assembled in India, out of the total 267 million phones to be sold in India in 2016. But the overall 'true localisation rate' of manufacturing, and sourcing components will be just under 6% of the total value of $11 billion worth components going into those 267 million phones in the calendar year 2016.The study added that 60 components and sub-components going into a phone can be made locally over the next five years, starting with industrial design, PCBA design and surface-mount-technology (SMT) level assembly, besides making major sub-components of chargers, batteries and cameras locally."Sourcing and assembling these key high-value components & sub-components from local manufacturers will drive greater value addition. This will drive the true local value addition to more than 30% by 2020 and potentially to as much as 50% thereafter," the study added.The study also found that contribution of domestically manufactured mobile phones increased from 14% in 2014 to 67% this year, which is further set to rise to 96% by 2020. Out of 50 facilities from OEMs to ODMs to EMS to component suppliers involved in manufacturing of mobile phones in India, almost three-fourth are Indian manufacturers, followed by Taiwanese with 10% and Chinese with 10%.