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techsuch May 9, 2021 0 Comments

Can ‘Make in India’ take on China’s tech industry? * As companies look to dilute their supply chain risks, India has an exclusive opportunity to emerge as the preferred destination for global companies * Some businesses in India have also set-up local supply chain operations, to de-risk from China, lower manufacturing costs, and escape high import duties levied by the governmentThe Covid-19 pandemic has hit global supply chains hard and spurred sourcingaway from the world’s manufacturing hub, China— a shift that started amid theUS-China tariff fight. Then came India’s clashes with China along its disputed Himalayan borderearlier this year, which eventually led to the former wooing companies lookingto diversify their manufacturing bases away from China.India is also readying a pool of land twice the size of Luxembourg to offercompanies that want to move manufacturing out of China and has reached out to1,000 American multinationals. Most recently, Bloomberg reported that Taiwan-based cable and connector maker Cheng Uei Precision Industry will start massproduction for Apple later this year from its new plant in India.Notably, Apple’s major assembly partners, Taiwan’s Foxconn Technology Group,Pegatron Corp. and Wistron Corp., have all set up either a subsidiary or aniPhone assembly plant in India.They were among 16 companies that won approval to manufacture products inIndia under a plan aimed at attracting investment of more than 10.5 trillionrupees (US$143 billion) for mobile-phone production over the next five years.Alongside Apple’s assemblers, Samsung Electronics was also among a list ofglobal firms that were lured by India with an incentive program. About 60% ofthe total production, or 6.5 trillion rupees (US$88 million), is expected tobe exported in the next five years, a report by Bloomberg indicated.### Covid-19 has pressured companies to review supply chainsThe disruptions in China impacted several industries in India, especially inthe automobile, pharmaceutical, electronic, and manufacturing sectors andmicro, small, and medium enterprises (MSMEs).Particularly, India is attempting to entice the world’s biggest smartphonebrands to make their products locally for global export with its ProductionLinked Incentive program, which signposts plans to increase manufacturinginducements each year.The financial incentives and plug-and-play facilities with an outlay of about500 billion rupees (US$6.6 billion) are offered to attract investments fromglobal companies in the manufacture of mobile phones and related components.The government of India will also provide an incentive of 25% on capitalexpenditure for the production of electronic components, semiconductors, andother parts.This is on top of the electronic manufacturing clusters with ready-to-usefacilities offered.Minister for Electronics and Information technology Ravi Shankar Prasad said“the move has the potential to make India as a global hub for mobile phonemanufacturing and make it the largest exported item out of India whilegenerating half a million jobs.”To put it in perspective, from the start of this year up until July, thebiggest names in US tech have invested around US$17 billion in India. Amazonbanked US$1 billion in January while Facebook nearly US$6 billion in lateApril and Google topped the chart with a US$10 billion commitment.Experts believe India’s digital economy, with more than 700 million internetusers and roughly half a billion yet to come online, is simply too big a prizefor big tech to ignore for long.Even before the pandemic, some companies in India had already started settingup a local ecosystem for supply chain procurement of components and productsbecause the Indian government started to levy high customs duty on the importof certain finished products and components.The purpose of such a move is believed to boost domestic manufacturing andpush its ‘Make in India’ initiative that encourages companies to manufacturetheir products in India.Since companies globally are looking to fix their broken value chains in theshort term and reduce their supply chain risks in the long term, the time hasripe, and India has an exclusive opportunity to emerge as a preferred businessdestination during and after the pandemic.* * ** * *Dashveenjit Kaur | @DashveenjitKDashveen writes for Tech Wire Asia and TechHQ, providing research-basedcommentary on the exciting world of technology in business. Previously, shereported on the ground of Malaysia’s fast-paced political arena and stockmarket.* * ** * *

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