India's Manufacturing Incentives Progress Amid Efforts to Cut China Imports

The incentives have resulted in production worth about Rs. 11 trillion ($131.6 billion) and nearly one million jobs over four years.

By Reuters | Updated: 26 September 2024 16:59 IST

India's Manufacturing Incentives Progress Amid Efforts to Cut China Imports

Photo Credit: Unsplash/ Shubham Dhiman

The PLI scheme offers four to six percent cash incentives on incremental sales to manufacturers

Highlights

PLI scheme has been successful to attract funds, boost manufacturing
India has emerged as a global hub for electronics manufacturing
India now plans to produce more laptops, tablets, computers and servers

India's cash incentives to boost domestic manufacturing have attracted over $17 billion (roughly Rs. 1,42,279 crore) of investment since the 2020 launch of the production-linked scheme, a government official said on Wednesday, amid efforts to reduce imports from China.

The scheme, which offers four to six percent cash incentives on incremental sales to manufacturers, was launched across 14 sectors including electronics, pharmaceuticals, textiles and white goods.

"The PLI scheme has been successful to attract investments and boost manufacturing," said Amardeep Singh Bhatia, Secretary of the Department of Promotion of Industry and Internal Trade.

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India has emerged as a global hub for electronics manufacturing, particularly smartphones, and is now the second-largest producer of mobile phones, he said, citing Apple's iPhone exports - exceeding $12 billion (roughly Rs. 1,00,437 crore) in the 2023/24 fiscal year ending March.

The incentives have resulted in production worth about 11 trillion rupees ($131.6 billion) and nearly one million jobs over four years, he said.

After reducing mobile imports from China by attracting global players like Apple, India now plans to produce more laptops, tablets, computers and servers, official sources said.

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On Tuesday, the government extended by three months the "import management system", launched in November 2023, which requires companies to register their laptop and tablet imports.

"We have signalled to the industry that we want to cut imports particularly from China," one of the government official sources, said.

India's IT hardware market, including laptops, is estimated at nearly $20 billion (roughly Rs. 1,67,395 crore), with nearly $5 billion (roughly Rs. 41,848 crore) domestic production, according to Mordor Intelligence, a consultancy.

India announced the new system for laptops, tablets, personal computers and servers after it rolled back an earlier plan to impose a licensing regime, requiring the likes of Apple, Dell, and HP to obtain licences for shipments of imported laptops and tablets.

In the first phase, the government has approved incentives for 27 IT hardware manufacturers including Acer, Dell, HP, and Lenovo to manufacturer in India, expecting production of about $42 billion (roughly Rs. 3,51,530 crore) over the next few years, government officials said.

"India has a strong case for building its own laptop manufacturing capabilities," said Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), a Delhi-based think tank, noting that China contributed significantly to these imports worth over $9 billion in 2023/24.

In India, rising incomes, expanding business activities and education have boosted demand for laptops and other devices, that favour local manufacturing.

Among local electronics manufacturers, Dixon Technologies has qualified for the incentives scheme and hopes to meet 15 percent of India's domestic demand by the fiscal year 2025/26. "Dixon plans to create a capacity of two million units by FY26, which shall cater to 15 percent of India's total requirement," Prithvi Vachani, Executive Director at Dixon Technologies told Reuters. Dixon, that has separate pacts with global firms like HP to make laptops and computers in India, will secure manufacturing components locally "in times to come", Vachani added.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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