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Electronics

India offers Foxconn and Samsung perks to boost phone production

New Delhi eyes $143bn output increase from program including parts makers

Among the companies enticed to boost output in India, some such as Foxconn assemble Apple's iPhone.   © Reuters

TOKYO -- India will provide subsidies to 16 manufacturers of mobile phones and electronic parts, including Hon Hai Precision Industry and Samsung Electronics, to expand production in the country.

The government anticipates that output will rise by a total of 10.5 trillion rupees ($143 billion) over the next five years, with just over 60% bound for export.The number of jobs directly created by the companies will top 200,000 over that period, New Delhi says.

Prime Minister Narendra Modi's government aims to boost India's profile as a manufacturing hub. After the coronavirus pandemic severed supply chain links, India is focusing again on promoting domestic production. New Delhi also looks to offer an alternative destination for companies seeking to move or diversify operations away from China as Beijing's tensions with the U.S. grow.

The Production Linked Incentive program for makers of phones and electronic components was established in April to help revitalize India's manufacturing sector. Over a five-year period, companies can receive subsidies equivalent to 4% to 6% of sales above the base year of fiscal 2019.

Recipients must meet requirements for additional investment and sales growth each year to remain eligible.

Besides Hon Hai, better known as Foxconn, subsidies will go to fellow Taiwanese contract manufacturers Wistron and Pegatron, assemblers of Apple's iPhone, India's Ministry of Electronics and Information Technology said. Five Indian smartphone makers, including Lava International, and six domestic component makers received approval as well.

About 330 million handsets, worth roughly $30 billion, were manufactured in India last fiscal year, more than five times the total in fiscal 2014.

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