India’s quest to push local version of GPS on smartphones may hurt Samsung, Xiaomi

Two years ago the government pumped $6 billion into its plan to incentivise top smartphone brands for manufacturing devices in India. This year, India’s local manufacturing facilities sent out 48 million shipments of smartphones in the first quarter alone, 7 per cent more than the same period last year. But now phone-makers such as Samsung and Apple are concerned about increased costs as a result of India’s push for self-reliance.

Additional costs a burden for budget smartphones?

The Indian government wants smartphones to be compatible with the Navigation with Indian Constellation or NavIC satellite, developed by its very own national space agency ISRO. But big brands including Xiaomi and Samsung, which are India’s top two smartphone sellers, are worried about additional hardware costs involved in the upgrade. While Apple commands demand in the premium segment despite its pricey handsets, Xiaomi and Samsung make a sizable chunk of their revenue from budget smartphones in India.

The NavIC is India’s local answer to the more widely used GPS developed in the US, and is already mandatory for tracking systems on public vehicles. It’s also India’s bid to join China, European Union, Russia and Japan, which have their own regional alternatives to GPS. The system being touted as a symbol of self-reliance by the current government, was originally approved in 2007, but became operational in 2018 after delays. The NavIC system is powered by a network of eight Indian satellites, and is safer as compared to GPS operated by a foreign defence agency.

The price to pay for India’s self reliance

But integrating it into smartphones alongside GPS will require an additional round of tests as well as research and more spending on production. This additional cost will impact new launches, especially for affordable phone-makers as compared to an already high priced Apple.

As part of India’s push to cut down dependence on imports from China, Apple has also started manufacturing iPhone 14 at Foxconn’s Chennai plant, as more facilities are being discussed. Foxconn has also partnered with Vedanta to manufacture microchips, for every device including smartphones, laptops and smart cars, at a $20 billion plant in Gujarat.