India plans $6.6 billion in incentives to woo smartphone makers

India is offering financial incentives and plug-and-play facilities with an outlay of about 500 billion rupees ($6.6 billion) to attract investments from global companies in the manufacture of mobile phones and related components.

The government will initially target five global suppliers and extend a financial incentive of as much as 6% on incremental sales of goods made in the country for a period of five years, according to the ministry for electronics and information technology. An incentive of 25% on capital expenditure will be provided for production of electronic components, semiconductors and other parts. Electronic manufacturing clusters with ready-to-use facilities will be offered.

The move has the potential to make India as global hub for mobile phone manufacturing and make it the largest exported item out of India while generate half a million jobs, Ravi Shankar Prasad, minister for electronics and information technology, said at a press conference in New Delhi Tuesday. While the clusters will prompt large companies to bring along their ancillary units, the local value addition in electronics manufacturing will rise to 40% by 2025.

India is seeking to woo global companies looking to diversify their manufacturing beyond China after a trade war and a pandemic has put the focus on the risks to supply chains. Prime Minister Narendra Modi has called for a self-reliant India and wants to encourage local manufacturing to create more jobs and revive an economy that is hurting from a lock down imposed to contain the spread of the coronavirus.

“The schemes will help India become totally self-reliant and penetrate global markets,” Amitabh Kant, chief executive officer at government think tank Niti Aayog, said at the press conference. “It will bring global value chain and enable India to become a leader in electronics manufacturing.”