INDIA’S government is considering fresh subsidies for electronic component-makers and cutting tariffs on imports to help boost local manufacturing, especially of smartphones made by companies such as Apple.
The Ministry of Electronics and IT proposed giving manufacturers of components such as batteries and camera parts at least 230 billion rupees (S$3.7 billion) in support, according to sources familiar with the matter, who asked not to be identified as the discussions are private.
The ministry also recommended reducing tariffs on some electronic components, an industry demand that will help bring down production costs, one of the sources said.
A final decision on the proposals will be made by the Cabinet, and if approved, details may be announced in the government’s upcoming budget in February, the sources said.
India’s Ministry of Electronics and IT and Finance Ministry did not immediately respond to requests for further information. The Economic Times of India earlier reported on the subsidy plan.
Prime Minister Narendra Modi’s government has spent billions of US dollars in incentives to lure companies such as Apple and Samsung Electronics to set up manufacturing plants in the South Asian country. Apple’s iPhone exports from India have grown at a rapid clip as a result.
Authorities now want to build on that momentum by creating a broader supply chain for smartphone makers, who import the bulk of their electronics parts from countries including China.
Some of the components being targeted by the proposed subsidy include microprocessors, memory, storage, multi-layered printed circuit boards, camera components such as lens, and lithium-ion cells, one of the sources said. The subsidies are likely to differ depending on the component, another source said.
Government think-tank Niti Aayog said in a report last year that the government should rationalise its tariffs and provide fiscal incentives to bolster electronic components production in India. The South Asian country faces tough competition from rivals such as Vietnam in luring foreign businesses looking to diversify their supply chains from China.
India’s current tariffs on electronics components – ranging from 0 to 20 per cent – is about 5 to 6 per cent higher than countries such as China and Malaysia, according to research from Niti Aayog. (Bloomberg)