India Receives Applications from Dell, HP, and Foxconn to Support Local Manufacturing
Several major tech companies, such as Dell Technologies Inc., HP Inc., and Foxconn Technology Group (a supplier for Apple Inc.), have requested government assistance to produce laptops in India.
Indian Prime Minister Narendra Modi’s $2.1 billion economic stimulus plan — a bid to boost local production of technology hardware such as laptops, PCs, tablets and servers — has drawn a huge industry response, Technology Minister Ashwini Vaishnaw said on Wednesday.
According to the plan, companies have the right to recover almost 5% of the factory prices of finished products. Sourcing components locally helps manufacturers gain more financial benefits.
About 32 companies, including domestic contract manufacturers such as Optiemus Electronics Ltd. and Dixon Technologies India Ltd., entities, had applied for incentives before the application process closed on August 30 at midnight.
The government is trying to replicate the success of its own incentives to launch local assembly of smartphones in 2020. The plan led to the rise of Taiwanese Apple suppliers Foxconn, Wistron Corp. and Pegatron Corp. in India, helping Apple source about 7% of its global iPhone production from the South Asian country in its last fiscal year.
The Modi administration expects companies to make an additional investment of 24.3 billion rupees ($294 million) and generate additional output of 3.35 trillion rupees ($40.5 billion) under the six-year plan.
“India is emerging as a very reliable supply chain partner and also a value chain partner because it has good engineering capabilities,” Vaishnaw told reporters at a news conference in New Delhi.
The companies could start production according to the plan already at the beginning of next year, he added.
Apple has yet to apply for incentives for local assembly of MacBook laptops and iPad tablets, government officials said.
Not all applicants may be approved for financial incentives. Smartphone incentives have shown that such programs tend to work well with a few companies that can increase production quickly and receive higher cash returns.
IT hardware manufacturing also aims to punish companies if production falls below set thresholds by reducing subsidies by up to 10%.
India announced plans to introduce a new licensing requirement for technology imports from November 1, covering everything from laptops and tablets to servers and data center components, to encourage companies to start assembling IT equipment locally. US technology companies have resisted the change.
