Strategic Expansion in Manufacturing
In a strategic push to bolster its manufacturing sector, India is successfully reducing its reliance on imports, particularly from China, aiming to position itself as a major global manufacturing hub. The introduction of the production-linked incentive (PLI) scheme in 2020 has catalyzed investments totaling over $17 billion across diverse sectors, marking a significant move towards India’s vision of achieving self-reliance in manufacturing.
The PLI scheme, offering cash incentives of 4% to 6% on incremental sales, has drawn considerable interest in 14 key sectors including electronics, pharmaceuticals, textiles, and white goods. This initiative is not only expanding India’s manufacturing base but also strategically reducing import dependencies.
Electronics Sector Leading the Charge
The electronics sector in India has particularly flourished under the PLI scheme, with Amardeep Singh Bhatia, Secretary of the Department for Promotion of Industry and Internal Trade, noting India’s rise as the world’s second-largest mobile phone producer. A significant highlight is Apple’s increasing shift to India, with iPhone exports from the country surpassing $12 billion in fiscal year 2023-24.
This surge in electronics production is contributing significantly to job creation, with nearly one million jobs generated since the PLI scheme’s inception. The production value has impressively reached about ₹11 trillion ($131.6 billion), indicating robust growth and positioning India as an essential player in global electronics supply chains. The government’s future plans include expanding domestic production of high-demand IT hardware like laptops and servers.
Reducing Import Dependency
A key aspect of India’s manufacturing strategy is the significant reduction of imports from China. The newly implemented “import management system” introduced in November 2023, requiring registration for companies importing laptops and tablets, aims to tighten control over such imports. The recent extension of this system underscores India’s commitment to strengthening its domestic IT hardware manufacturing capacity.
The local IT hardware market is now valued at roughly $20 billion, with domestic production nearing $5 billion. The reduction of the over $9 billion in IT hardware imports from China is now a strategic priority for India, promoting local manufacturing and enhancing self-sufficiency.
Empowering Local Manufacturing and Global Aspirations
The initial phase of the PLI scheme has approved incentives for 27 IT hardware manufacturers, including industry giants like Acer, Dell, HP, and Lenovo. This move is expected to facilitate production worth $42 billion in the near future, significantly boosting local manufacturing capacities.
Local manufacturers are keenly adapting to these opportunities; for example, Dixon Technologies is set to fulfill 15% of India’s laptop demand by 2025-26, aiming to establish a production capacity for two million units. The collaboration with global firms such as HP highlights India’s strategy to build local expertise, reduce import dependency, and foster a robust manufacturing ecosystem.
As India continues to enhance its manufacturing capabilities, particularly in electronics and IT hardware, the goal extends beyond meeting domestic needs to establishing India as a significant exporter. The proactive government measures to manage imports, incentivize production, and encourage partnerships are transforming India into a key player in the global manufacturing arena, setting a foundation for sustained economic growth and industrial development.
