The government expects the program for electronics alone could lead to $153 billion worth of manufactured goods over the next five years and create about one million jobs directly and indirectly.
India’s latest set of incentives to entice businesses moving away from China seem to be working, with companies from Samsung Electronics Co. to Apple Inc.’s assembly partners showing interest in investing in the South Asian nation.
Prime Minister Narendra
Modi’s government in March announced incentives that make niche firms --
electronics manufacturers -- eligible for a payment of 4 per cent-6 per cent of
their incremental sales over the next five years. The result: about two dozen
companies pledged $1.5 billion of investments to set up mobile-phone factories
in the country.
Besides Samsung, those that
have shown interest are Hon Hai Precision Industry Co., known as Foxconn,
Wistron Corp. and Pegatron Corp. India has also extended similar incentives to
pharmaceutical businesses, and plans to cover more sectors, which may include
automobiles, textiles, and food processing under the program.
While companies have been
actively looking to diversify supply chains amid the US-China
trade tensions and the coronavirus outbreak, it hasn’t yet translated into
big gains for India despite the nation making it cheaper for businesses to open
shop. Vietnam remains the most favored destination, followed by Cambodia,
Myanmar, Bangladesh and Thailand, according to a recent survey by Standard
Chartered Plc.
“There is a reasonable
chance for India to gain in terms of incremental investment of supply chains
within the country over the medium term,” said Kaushik Das, chief India
economist at Deutsche Bank AG in Mumbai. “These programs are aimed at
increasing India’s manufacturing share in the gross domestic product.”
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