Gains from Mobile Phone Manufacturing in India through Backward-Linked Participation in Global Value Chains: Impact on Domestic Value Addition, Exports, Employment and Wage Income

This study comprehensively analyses India's mobile phone manufacturing sector, examining its remarkable transformation through strategic integration into Global Value Chains (GVCs). It quantifies the impact of this integration on domestic value addition (DVA), exports, employment, and wage incomes, particularly contrasting the initial import-substitution policy phase (2016–19) with the recent export-oriented regime driven by the National Policy on Electronics 2019 and the Production-Linked Incentive (PLI) scheme (2019 onwards). Employing a Leontief Input-Output (IO) framework, the study constructs highly disaggregated Domestic Use Tables from plant-level data from the Annual Survey of Industries (ASI) from 2016–17 to 2022–23. This methodology facilitates a rigorous estimation of both direct and indirect economic contributions. It introduces a novel approach to accurately assess the net trade balance by isolating the value of imported components used explicitly in mobile phone production, thus addressing recent scholarly debates. The analysis is further contextualised using the 'Flying Geese Model' to interpret India's evolving position in the global electronics trade. The findings reveal a substantial enhancement in economic gains following the policy shift towards export orientation. Total DVA (direct plus indirect) grew by 374%, with its share in gross output rising from an average of 9% in the first phase to 22% in the second. Contrary to prevailing scepticism, the analysis demonstrates that India achieved a robust positive net export balance in mobile phones and their components since 2019, even after precise adjustments for imported inputs. The sector has been a significant engine for job creation; ASI data shows direct employment grew from 24,739 in 2016-17 to 254,270 in 2022-23, accompanied by substantial growth in indirect employment and a notable rise in jobs for female production workers. This employment boom is complemented by significant growth in wage incomes, which increased by 396% for direct workers between the two phases. Furthermore, evidence of product upgrading is established through rising export unit values and a doubling of a constructed Output Quality Index. The study concludes that backward-linked GVC participation, focused on achieving scale through exports, is a potent strategy for boosting aggregate DVA, employment, and income, even if the initial DVA ratio is modest. The success of the mobile phone industry offers a powerful blueprint for India's ambitions in the broader electronics sector, underscoring the importance of prioritising scale and deep GVC integration over potentially counterproductive local content mandates.