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Indian Government Continues Support of International Manufacturing Investment

Indian Government Continues Support of International Manufacturing Investment

Last year, India’s Ministry of Electronics and Information Technology approved a scheme to boost Indian production of mobile phones and other electronics components as part of the government’s National Policy on Electronics. The production-linked incentive (PLI) program seeks to boost Indian manufacturing, bolstering an estimated $33 billion USD-worth of electronics and IT exports. Projections of increasing Indian manufacturing to account for 25 percent of the country’s GDP (from the current levels of 17-18 percent) are also exciting foreign investors.

As the government reforms rules and regulations favored by global manufacturers, Apple and Samsung are expanding mobile phone production in India plants. The PLI scheme has influenced Apple, for instance, to increase its iPhone manufacturing in India—especially as considerations relating to dependence on Chinese manufacturing remain an international concern.

The rationale behind the PLI scheme is to attract foreign investment and to incentivize Indian electronics manufacturers to expand their in-country footprints. Eligible electronics manufacturers are either Indian companies or those that have registered business units in India, including Apple, Samsung, LG, Pegatron in Taiwan, and Flex in Singapore.

As the Indian economy continues to suffer from the COVID-19 pandemic’s drastic ripple effects, incentive programs such as PLI seek to regenerate business confidence in investing in India. This falls into a broader ecosystem of widescale government efforts to modernize the Indian manufacturing sector. Relatedly, Tesla announced in January 2021 that the company would launch Tesla Motors India in Bangalore.

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