India's Tech Hardware Subsidy: Impact & Outlook

The Indian government recently confirmed that it will provide subsidies to 27 international technology hardware manufacturing giants to promote the development of the domestic electronics manufacturing industry.This news was reported by the Hong Kong-based South China Morning Post on the 20th.According to the official statement of the Indian government on the 18th,IT hardware manufacturers including Dell,HP,Lenovo,and Foxconn,among 27 companies,have been approved for the Indian governments Production-Linked Incentive (PLI) scheme.Among them,23 companies are ready to start production immediately,while the other 4 companies will start production within 90 days.

Ashwini Vaishnaw,Minister of Electronics and Information Technology of India,said that the 27 approved applications are expected to bring nearly 30 billion rupees (about 360 million US dollars) in investment.This move is expected to create about 50,000 direct jobs and 150,000 indirect jobs in India.In addition,the output value of Indias information technology hardware is expected to reach 42 billion US dollars.

According to a report by the American CNBC website,the budget for this PLI scheme is 170 billion rupees (approximately $2 billion) over six years,covering products such as laptops,tablets,micro personal computers,and servers.Initially launched in 2020,the PLI scheme is regarded by the Indian government as a key strategy to make India a "global hub for electronics manufacturing," with the goal of achieving a total output value of $300 billion by 2026.Currently,the scheme has already encompassed 14 major manufacturing sectors in India.

However,the Indian news website "The Wire" pointed out that the PLI scheme still has some shortcomings.As of March 2023,only 29 billion rupees (approximately $340 million) of funds under the scheme had been disbursed.Indian government officials stated that they would review the program to identify its deficiencies.Although the PLI scheme has not fully met expectations,it is noteworthy that India has successfully attracted Apple to assemble phones locally.However,controversies surrounding the quality of iPhones made in India persist."Indian-made Apple phones have quality issues,with about 50% of the produced iPhone casings facing rejection," reported India’s "Firstpost" in February,highlighting the quality problems with Indian-made Apple phones.According to reports,around 50% of the phone casings produced by India’s Tata Group failed Apple’s quality control inspections.

In addition,the number of enterprises willing to set up production in India is still limited.In May this year,the Indian government announced an increase in the subsidy scale to 2 billion US dollars.However,due to the poor effect,the Indian government had to extend the deadline for applications to August 30th.

Despite the challenges,Indias electronics manufacturing and mobile phone export industries still show a certain upward trend.Indias Economic Times reported that from April to August this year,Indias mobile phone exports almost doubled,reaching 5.5 billion US dollars.At the same time,the total output value of Indias electronics manufacturing industry exceeded 150 billion US dollars.