2.5 lakh people lost jobs in handset sector as Chinese companies wipe out local rivals

New Delhi: Over 250,000 people lost jobs in the past two years in the handset sector as brick-and-mortar stores selling phones made by local rivals shut shops amid an onslaught from Chinese companies that aggressively capture market through ecommerce channel.

There were about 4 lakh handset retailing outlets in India, including mom-and-pop and large format stores and each of them employed 3-5 in-shop brand representatives. However, following a slump in sales, small-format stores shut shops, leading to loss of jobs for over 2.5 lakh brand promoters.

Also, both domestic and foreign manufacturers reduced retailing expenses to keep cost low and improve margin. Domestic handset manufacturers like Micromax and Intex have also laid off people from manufacturing units.

“More than 250,000 jobs have been lost over the past two years because many retail shops had closed, in-shop promoters have been laid off and even distribution chains had shut shop,” Pankaj Mohindroo, president of the India Cellular and Electronics Association (ICEA) told a business daily. “Some 20,000-25,000 people on the manufacturing side have also been affected by the job cuts, but it is retail and distribution that have seen the maximum impact.”

However, the All India Mobile Retailers Association (AIMRA) told the publication that estimates of ICEA were ‘conservative’ and according to them around half of the shop assistants at mom-and-pop and large-format stores were laid off because more consumers were researching online before making purchases, leaving little room for retailers to influence their choices.

“Because of the impact of online shopping and several brands shutting shop, layoffs in the handset industry have been on the higher side,” AIMRA national president Arvinder Khurana told the business daily. “In the stores I own, I have half the people that I used to have about a year back.”

Before the emergence of online channels retails shops were the primary channel of manufacturers to push handset sales. But over the past two years, the landscape of India’s handset industry has completely changed with Chinese companies now commanding 75% of the market mostly through the online channel.

Experts believe, 4G feature phone launched by Reliance Jio also severely impacted sales of local manufacturers like Intex, Karbonn and Lava.

Analysts attribute slower economic growth behind job loss in various sectors. India’s economic growth slowed to 6.8% in FY19. Other than the handset sector, the auto industry has been another biggest casualty of slowing consumption in the economy. Auto sales volumes in the month of June contracted the most since FY01. Industry experts fear job loss to the tune of more than one million in the auto sector if sales continue to slump.