Illustration showing shipping containers with India and China's flags. For representational purposes.
Credit: iStock Photo
New Delhi: India's cash incentives to boost domestic manufacturing have attracted over $17 billion 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 4-6 per cent 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.
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 in the 2023/24 fiscal year ending March.
The incentives have resulted in production worth about Rs 11 lakh crore ($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.
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, with nearly $5 billion 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 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 per cent of India's domestic demand by the fiscal year 2025/26.
"Dixon plans to create a capacity of 2 million units by FY26, which shall cater to 15 per cent 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.