28/01/2015 8:53 AM IST | Updated 15/07/2016 8:24 AM IST

Spice Mobile To Invest Rs500 Crore In Uttar Pradesh Plant

Models pose with Spice mobile handsets at the launch of the product in New Delhi, India, Tuesday, June 7, 2005. The handsets are priced from INR 2500 (US$ 58) upwards. In the background is the poster of Bollywood actress and brand ambassador Priyanka Chopra. (AP Photo/Gurinder Osan)

Homegrown handset player Spice will set up a manufacturing unit in Uttar Pradesh with an investment of about Rs 500 crore to make affordable mobile phones in the country.

The company has inked a Memorandum of Understanding with the UP government, wherein the company will get state support in establishing the facility in a time bound manner and it will also facilitate the necessary infrastructure, ecosystem and incentives under various schemes announced by the State and Centre.

"The manufacturing unit is part of our contribution to the 'Make in India' vision. Domestic manufacturing will also help us introduce affordable mobile Internet devices in India. We will look at devices priced below Rs 5,000 and we intend to start manufacturing by the end of this year," Spice Group Chairman Dilip Modi said.

He added that the manufacturing unit will also support export of handsets to emerging markets in Asia and Africa, which present a huge opportunity. "The India market is around 300 million handsets and there are similar opportunities in Asia and Africa. We will look at first serving the Indian market and then ramp up to cater to these newer markets as well."

The unit will have a capacity of about 1-2 million handsets a month, which will be gradually expanded to five million, Modi added. "It is important that the component ecosystem also grows along with handset manufacturing, something that we have seen in China, where these villages have been converted into tech hubs. The government is keen on boosting domestic electronic manufacturing and we could see the kind of growth that the auto sector saw with the introduction of component manufacturing in the country," he said.

The company currently sells about a million handsets a month and has a revenue run rate of Rs 150-200 crore. Currently, its devices are manufactured in China. According to research firm IDC, India was the fastest growing smartphone market in Asia/Pacific with July-September 2014. The shipments grew 82 per cent year-on-year to 23.3 million units in the third quarter of this year, while it was higher by 27 per cent on a quarter-on-quarter basis.