Following the success of iPhone production in India, the government is ready to sweeten the deal to start desirable manufacturing of MacBooks and iPads in the country and is looking to expand the base of the Production Linked Incentive (PLI) scheme for IT hardware to about Rs. 20,000 crore against the current outlay of Rs. 7,350 crore which does not get much of a response from the industry.
Senior sources at the Information Technology Ministry said the government wants Apple's manufacturing ecosystem to grow by leaps and bounds in the country at a time when the US electronics giant is considering a strategy of China plus one when it comes to global procurement of products.
"We have had success with iPhone production since all of Apple's major suppliers (Foxconn, Wistron, and Pegatron) are now producing smartphones in our nation valued at billions of dollars. The next step for us is to produce MacBook and other products like iPad in India,” the sources told B2B.
The Ministry of Information Technology, which is the nodal ministry for promoting electronics manufacturing in the country, has already submitted a proposal to promote the scheme, and the matter is now in the hands of the Ministry of Finance and a few other ministries. related.
While the previous scheme, approved by the Federal Cabinet in February 2021, promised stimulus support of 1 percent to 4 percent over four years, the new scheme wants to increase it to an average of 5 percent. Unlike smartphones, where the government imposed a 20 percent tariff on imports, there are no such restrictions for laptops because the class falls under ITA-1, allowing duty-free imports.
"We believe that the previous scheme was not enough to counteract the disadvantage that companies would have faced if they had done in India. Therefore, with the improved incentive scheme and higher financing charges, the new scheme will certainly induce companies to invest in India as well,” the source said.
Apple has been eager for products outside of iPhones made in India as the company tries to strike a balance with China, which is not only its largest production base but also a strong sales market.
In addition, the company is hampered by the lack of a strong supplier base in the country, as moving component manufacturers from China to India has not been easy amid rising tensions between the two countries.
While companies have been pressing the government to loosen controls to allow Chinese investment in India, permits and approvals still take time because the center does not want to cede control to entities from the neighboring country.
"Joint venture is one of the avenues we are looking at, provided the Indian entities have a say and control," the source said.
The government believes that getting Apple and other major vendors such as HP and Dell to have a broad offering in India will be critical to gaining scale and status as a "global manufacturing hub."
"These are big companies that need to serve markets around the world. With the ecosystem gradually building up in India following PLI schemes, we are confident that an improved and friendlier scheme will pay off in IT hardware," a source said.
However, companies are also reporting a lack of demand in global markets, as well as a hiring freeze at key companies such as IT companies. "How does one expand in such cases?" A recession is also brewing in the West, the official continued.
The planned plan has servers, laptops, tablets, and all-in-one PCs as target categories. The plan is envisioned for five major global players and 10 local champions in the field of IT hardware manufacturing.
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