India will provide subsidies to some of the world’s biggest tech hardware companies, including Apple supplier Foxconn Technology Group and computer giant Lenovo Group, under a scheme to boost domestic manufacturing and strengthen the South Asian country’s bid to become a major hub in the global electronics supply chain.
New Delhi has approved applications for subsidies of 27 companies, which also include Dell, HP and AsusTek Computer, under the country’s Production Linked Incentive (PLI) scheme covering domestic assembly of desktop and laptop personal computers (PCs), tablets and other tech hardware, according to an official statement on Saturday.
“Twenty-three out of 27 approved applicants are ready to start manufacturing on day zero,” said Ashwini Vaishnaw, India’s Minister for Railways, Communications, Electronics and Information Technology. “Four companies will start production in the next 90 days.”
Meanwhile, Apple contract manufacturer Luxshare Precision Industry Co has denied reports it walked away from a US$330 million deal in India, asserting that the company has “never made such an investment decision”, the Shenzhen-listed firm said on Monday in response to a question raised on the bourse’s investor platform.
India expects the PLI-approved companies to directly create 50,000 jobs and indirectly, about 150,000 more jobs under the scheme, based on a total investment of US$360 million, according to the government’s statement. It said the estimated value of information technology hardware production would reach US$42 billion.
The new subsidy approvals followed last year’s earlier PLI phase for smartphone manufacturing, which provided government incentives to the Indian unit of Taiwanese firm Foxconn, formally known as Hon Hai Precision Industry.
New Delhi’s PLI push, an integral part of Prime Minister Narendra Modi’s “Make in India” campaign that kicked off in 2014, shows that the world’s most populous country is stepping up its economic transformation, as more global manufacturers diversify production from mainland China.
As the PLI scheme helps to drive Modi’s agenda to turn India into a new hi-tech manufacturing hub, New Delhi also aims to cut the country’s reliance on imports from China and tighten the government’s scrutiny of Chinese companies operating in the market.
The PLI approval for Lenovo, the world’s biggest PC vendor, comes after other Chinese tech companies found themselves in trouble in India amid rising geopolitical tensions between Beijing and New Delhi.
Xiaomi is engaged in a legal battle with Indian authorities to unfreeze about US$670 million in funds seized from the company’s local subsidiary in April last year over allegations of foreign exchange violations.
India’s ED, the agency responsible for fighting financial crimes, had accused Xiaomi India of making suspicious remittance payments over the years to three foreign-based entities. India’s High Court in April this year rejected Xiaomi’s plea for the government to return the seized funds.
Earlier this month, Luxshare received approval to invest an additional US$330 million in a plant in Vietnam’s northern province of Bac Giang. That amount raises the company’s total investment to US$504 million in its Vietnamese facility, where it will manufacture cables for telecommunications equipment, touch pens, smart positioning tags and smartwatches.