India is making moves to have advantage over China as the preferential destination for smartphone-makers. Thus, becoming the hub for global smartphone phone supply chain.
Indian Government announced that 500 billion rupees ($6.6 billion) will be set aside for the next five years in its latest move to woo global companies.
China is the largest exporter of smartphones globally according to Caixin Global. It is also the dominant player in the global supply chain for smartphone manufacturing.
The new incentive program by India, is aimed at attracting global smartphone-makers who intend to diversify from China as countries are beginning to rethink their over dependency on China, in addition to the trade war between two world economic superpowers; USA and China.
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According to the press release by Indian Ministry of Electronics & IT, “the Scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under the target segments, to eligible companies, for a period of five years subsequent to the base year.”
With a view to building a robust manufacturing ecosystem which will be an asset to the global economy, India is looking forward to developing a strong ecosystem across the value chain and integrating it with global value chains.
This will be done through three Schemes namely, the (i) Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, (ii) Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and (iii) Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.
The PLI Scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under the target segments, to eligible companies, for a period of five years subsequent to the base year
The SPECS shall provide financial incentive of 25% on capital expenditure for the identified list of electronic goods, i.e., electronic components, semiconductor/ display fabrication units, Assembly, Test, Marking and Packaging (ATMP) units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods.
The EMC 2.0 shall provide support for creation of world class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play facilities for attracting major global electronics manufacturers, along with their supply chains.
Chief Executive Officer at government think tank Niti Aayog, Amitabh Kant said at the press conference, “the schemes will help India become totally self-reliant and penetrate global markets. It will bring global value chain and enable India to become a leader in electronics manufacturing.”
In a press conference in New Delhi on Tuesday, Indian Minister for Electronics and Information Technology, Ravi Shankar Prasad, said the move has the potential to create half a million jobs. He added that it can make India the global hub for mobile phone manufacturing and make it the largest exported item out of India.
Analysts have said that India will have a long term competitive advantage over China with its programs.
Over the past years, India’s manufacturing capabilities in the smartphone industry have greatly improved. In 2014, about 70% of phones bought in India were imported. Now, over 90% of the phones used in the country are assembled locally.
Indian Prime Minister Narendra Modi is strong in his determination to encourage local manufacturing and promotion of a self-reliant India. The country with a population of over 1.4 billion people need local manufacturing to create the much needed jobs for its citizens especially as it recovers from the damaging effect of Covid-19 lockdown on the economy.