Firms will receive incentives worth between 4% and 6% of sales of products made in India © MANJUNATH KIRAN/AFP via Getty Images
Firms will receive incentives worth between 4% and 6% of sales of products made in India © MANJUNATH KIRAN/AFP via Getty Images

India offers incentives for local smartphone production

14 October 2020

India is to provide new incentives to more than a dozen electronics suppliers to boost the country’s smartphone supply chain.

India’s Ministry of Electronics and IT said the companies included suppliers to Samsung and Apple as well as Samsung itself.

Firms will receive incentives worth between 4% and 6% of the sales of certain products made in India.

But in order to benefit from the incentives the companies will have to increase production of smartphones in India.

The Production Linked Incentive Scheme for Large Scale Electronics Manufacturing will last for five years.

Ravi Shankar Prasad, minister for electronics and IT, communications, law and justice, said: “Industry has reposed its faith in India’s stellar progress as a world class manufacturing destination and this resonates strongly with the prime minister’s clarion call of Atmanirbhar Bharat – a self-reliant India.”

Participating companies include iPhone suppliers Foxconn Hon Hai, Wistron and Pegatron; Indian companies including Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics; and Austria’s AT&S.

“These companies are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production,” said the Ministry of Electronics and Information and Technology.

The incentive programme is expected to bring investment worth 110bn rupees ($1.5bn) to India.

Foxconn, Wistron and Pegatron plan to invest nearly $900m over the next five years to benefit from the incentives, according to Reuters.

India Cellular and Electronics Association said the country’s smartphone industry was now worth about $230bn, with China’s Xiaomi being the largest producer.

In 2018 Samsung opened what it claimed to be the “world’s largest mobile factory” near New Delhi.

Prime minister Narendra Modi is seeking to position the country as a manufacturing hub.

In June Modi called for a robust local manufacturing sector to strengthen “India’s stake in the global supply chain”.

In a speech to the Confederation of Indian Industry Modi called on members of the organisation to “come forward in a new role post corona”.

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