iPhone makers are said to be among winners in US$6.6 billion India plan
- The Indian government is expected to ratify a plan aimed at bringing US$150 billion in smartphone production over the next five years
- The Production Linked Incentive programme will offer manufacturing incentives to entice the world’s biggest smartphone brands to make their products in India and export to the world
At a cabinet meeting on Wednesday, the Indian government is expected to approve a plan aimed at bringing US$150 billion in smartphone production over the next five years, said the people, asking not to be identified because the matter is private.
Under the Production Linked Incentive programme, or PLI as it is called, manufacturing incentives will rise each year in an ongoing effort to entice the world’s biggest smartphone brands to make their products in India and export to the world.
Amid rising trade and political tensions between Washington and Beijing, India is betting that many global brands will be keen to reduce their dependence on China. If successful, the programme could set in motion a shift in electronics manufacturing in the next five years.
“It’s a thoughtful move by the government aimed at wooing Apple to bring significant iPhone manufacturing to India because, when the iPhone maker shifts, an entire ecosystem follows,” said Hari Om Rai, chairman and founder of Lava International, India’s largest home-grown mobile phone maker. “The next five years will be dramatic, and India could become the new China in phone manufacturing.”
Lava, based in the New Delhi suburbs, is among the Indian smartphone makers applying for manufacturing incentives, along with Karbonn Mobiles and Dixon Technologies India.
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To receive the incentives, foreign manufacturers including Foxconn, Wistron and Samsung must commit to specific investment and production targets of devices that sell for at least 15,000 rupees (US$200); Indian mobile phone makers will have no such restrictions.
Last month, Ravi Shankar Prasad, India’s minister for electronics and information technology, told reporters that Apple accounts for 37 per cent and Samsung 22 per cent of global sales revenue share from smartphones. The incentive scheme would “increase their manufacturing base manifold in the country”, the ministry said in a statement.
Apple did not respond to requests for comment. Pegatron, the second-largest iPhone assembler after Foxconn with a number of factories in China, said in July that it would set up a plant in India. Apple accounts for more than half of Pegatron’s business. If approved, Pegatron’s first India factory would be eligible for PLI, the people said.
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In the next five years, India could attract an additional 10 per cent of global smartphone production, Credit Suisse said in a recent note. And though the country is the world’s second-largest mobile phone market with plenty of room for domestic sales growth, the government’s clear aim is to eventually become a global manufacturing colossus to rival China. Almost two-thirds of the stimulus programme is targeted at the export market, the people said.
“India’s incentive scheme will be a game changer that will make the country No 1 in mobile manufacturing, or at least a close No 2 by 2025,” Mohindroo said.