India plans to increase economic incentives for manufacturers making tablets and laptops in India, attracting companies such as Apple and Dell to challenge China as a manufacturing base.
The federal Technology Ministry has introduced a revised program for consulting electronics industry executives, including payments of more than a half billion dollars per company, people familiar with the matter said. India wants to boost production of tablets and laptops to reduce imports and make the country an export hub in the long run.
Companies such as Apple, Dell, HP, and Asustek Computer are also trying to expand or start local production, the people said. Specifically, the country wants to persuade Apple, which already assembles iPhone handsets in India through its Taiwanese suppliers, to manufacture iPad tablets locally.
The plan has a maximum of Rs. 4,500 crore per manufacturer, according to government documents seen by Bloomberg News. To qualify, foreign companies have to invest Rs. 700 crore in India in five years from the outlays they have made till March 2021. Incentives would depend on local procurement of ingredients and could be equivalent to around 6 percent of finished product sales.
The plan is subject to change after consultation with the industry. Last year, India spent Rs. 7,350 crore to boost local manufacturing and exports of IT products such as laptops, tablets and personal computers, but efforts failed to attract companies due to the small size of the incentives.
Prime Minister Narendra Modi’s administration is stepping up efforts to woo global electronics names through strategic initiatives as geopolitical tensions and its botched Covid Zero policy dampen China’s appeal. There are signs of momentum: Apple started making its new iPhone 14 in India earlier than expected, with a surprisingly smooth product rollout that shortened the gap between Chinese and Indian products from months to just weeks.
Apple has yet to ramp up iPad production in India. In addition to the incentives, the US company could also attract the Indian computer and tablet market, which grew by 12 percent last quarter, according to researcher Canalys, even as global electronics demand slowed.
Companies like Dell and HP, which already make small volumes of laptops in India and have high capacity, may find it unpalatable to invest more in ramping up production. Meanwhile, Chinese manufacturers such as Lenovo may find it difficult to get a boost in 2020 amid New Delhi’s frayed ties with Beijing following a standoff over the Himalayan border between the countries.
© 2022 Bloomberg LP
