India’s cabinet approves a $6.37bn plan to boost electronics manufacturing

electronics manufacturing India

NEW DELHI (Reuters) – India’s cabinet has approved a 480 billion rupees ($6.37 billion) plan to boost electronics manufacturing and woo large investment to a country which, following Prime Minister Narendra Modi’s Make-in-India drive, has become the world’s second-biggest mobile phone manufacturer.

New Delhi will provide companies a production-linked incentive of 4% to 6% on incremental sales – over base year 2019-20 – of goods made locally for five years, the government said in a statement on Saturday.

The move is likely to boost exports from India, where global companies such as Samsung Electronics Co Ltd, Apple Inc – through contract manufacturers Hon Hai Precision Industry Co Ltd (Foxconn) and Wistron Corp – Xiaomi Corp and Oppo assemble smartphones.

To promote high-value local electronics manufacturing, India plans to provide a financial incentive of 25% on capital expenditure for some electronic components, semiconductors and display fabrication units, the government said.

Companies investing in new plants or expanding existing facilities will be eligible for this benefit, the government said.

As part of the plan, the government also aims to create manufacturing clusters – with a minimum area of 200 acres – that have common facility centres, ready-built factory sheds and plug-and-play facilities.

The new measures come at a time the world is battling the coronavirus epidemic that first appeared in China, disrupting and halting global supply chains, and which is likely to push companies to diversify their market presence.

With over a billion wireless connections and just about 480 million smartphones, India offers device makers huge room for growth, and its massive labour force provides companies a cost-effective alternative than neighbouring China.

(Reporting by Sankalp Phartiyal; Editing by Christopher Cushing)

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