Lenovo-Motorola has announced its intentions to establish a manufacturing plant for its electronic devices in India. The Indian market has been extremely responsive to devices made by Lenovo-Motorola with around 10 million units sold just last year. Before taking concrete steps in this direction, however, the company has communicated that it will need to study prevailing tax laws in light of GST. Other companies such as Oppo and Gionee have already established local manufacturing and it is possible that Lenovo-Motorola may follow in their footsteps.
Lenovo mobile business group (including Motorola division) head Dillon Ye has stated previously that the company has been looking into upgrades to its existing product portfolio and fresh rounds of investment thanks to the strong growth experienced by the company in India.
Currently, Chennai-based contract manufacturer Flextronics fulfils some of Lenovo-Motorola’s requirement of the Moto E, Moto G, and Lenovo K-series devices through production at the Flextronics facility in Chennai. Despite operating a facility capable of producing over 6 million devices annually, Flextronics’ own manufacturing is not sufficient to meet Lenovo-Motorola’s level of demand.
Make in India
With the Make in India initiative providing many benefits to companies seeking to establish local manufacturing, etc. the biggest of these benefits for Lenovo-Motorola comes in the form of around 12.5% lower duty when compared to the cost of sourcing the same item from outside India.
The potential savings have also tempted Apple Inc. to consider setting up a production facility in India.