Mumbai: Mobile phone production in India is expected to grow from 31 million units in 2006 at a compound annual growth rate (CAGR) of 28.3 per cent to reach 107 million units in 2011.

According to new research by Gartner, mobile phone production revenue is expected to reach $13.6 billion by 2011, up from $4.9 billion in 2006, a CAGR of 26.6 per cent.

Mainly the expanding mobile subscriber base in India and favourable local government policies promoting local electronics manufacturing in India will drive the growth in production.

At present, mobile phone production in India is dominated by the top five global handset vendors; Nokia, Motorola, Samsung, Sony Ericsson and LG. There are very few local-brand mobile phone makers with low production volumes and are typically focused on low-end and mid-range handsets.

However, Gartner expects new players, local as well as global, to enter the mobile phone manufacturing market in India, aided by the global electronics manufacturing services (EMS) providers'' present in India.

Ganesh Ramamoorthy, principal research analyst, Gartner says, "Existing global handset vendors as well as new entrants will outsource their production to EMS vendors to reduce ''time to market'' and achieve faster penetration for their own branded handsets. This will raise EMS vendors'' share of total mobile phone production in India to nearly 40 percent by 2011."

Though domestic mobile phone production currently caters mainly to local demand, over the next five years Gartner expects as much as 30 percent of production to be exported to neighbouring regions that are also demanding low-cost handsets such as Africa, the Middle East and other parts of South Asia.

Ramamoorthy cautioned that India faces a key challenge as it lacks a mature component supply base to support local mobile phone manufacturing.

"India''s production of vital components for mobile phones is very limited because much of it is imported. This may not be viable in the long term, especially with demand for handsets expected to grow rapidly. Therefore, establishing a reliable component supply base will be vital for the Indian handset manufacturing industry to stay competitive in both the domestic market and the export market," said.