Indian Government to Offer Up to $5 Billion in Incentives for Electronics Production, Weaning Off China

India will offer up to $5 billion (roughly Rs. 42,221 crore) in incentives to companies to make components locally for gadgets from mobiles to laptops, two government officials said, in a bid to bolster the burgeoning industry and wean off supplies from China.

India's electronic production has more than doubled in the last six years to $115 billion (roughly Rs. 9,71,095 crore) in 2024, led by growth in mobile manufacturing by global firms such as Apple and Samsung. It is now the world's fourth-largest smart phone supplier.

But the sector faces criticism for its heavy reliance on imported components from countries such as China.

"The new scheme will incentivise production of key components like printed circuit boards that will improve domestic value addition and deepen local supply chains for a range of electronics," one of the two officials said.

The incentives are likely to be offered under a new scheme expected to be launched in two to three months, said the officials, who asked not to be identified as details of the scheme are not yet public.

The scheme is likely to offer incentives totalling between $4-$5 billion to global or local firms which qualify.

The plan, designed by the India's electronics ministry, has identified components eligible for incentives and is in its final stages.

The finance ministry will approve the scheme's final allocation soon, the first official added, with the sources expecting it to be launched in the next 2-3 months.

India's electronics ministry and finance ministry did not immediately respond to requests for comment.

India is aiming to expand its electronics manufacturing to $500 billion (roughly Rs. 42,22,075 crore) by the fiscal year 2030, including production of components worth $150 billion (roughly Rs. 12,66,629 crore), according to the government's top policy think tank Niti Aayog.

India imported electronics, telecoms gear, and electrical products worth $89.8 billion (roughly Rs. 7,58,334 crore) in the fiscal year 2024, with more than half sourced from China and Hong Kong, according to an analysis by private think tank GTRI.

"This scheme is coming at a time when it is critical to promote component manufacturing that will help us aim for a global-scale of electronics production," Pankaj Mohindroo, head of India's Cellular and Electronics Association, said.

© Thomson Reuters 2024