The Indian government considers providing nearly 3 billion USD in aid and tax cuts for electronic devices
The Indian government is considering new subsidies for electronic component makers and import tax cuts to help boost domestic production, especially of smartphones made by companies such as Apple Inc. .
The Ministry of Electronics and IT proposed support for manufacturers of components such as batteries and camera parts of at least 230 billion rupees ($2.7 billion), according to people familiar with the matter who asked for it. anonymous as discussions are private.
A source said the ministry also recommended tax reductions on some electronic components, the industry’s demand for which will help reduce production costs.
The final decision on the proposals will be taken by the cabinet and if approved, details could be announced in the government’s upcoming budget in February, the people said.
India’s Ministry of Electronics, IT and Finance did not immediately respond to requests for more information. The Indian Economic Times had earlier reported on the subsidy plan.
Prime Minister Narendra Modi’s government has spent billions of dollars to encourage companies like Apple and Samsung Electronics Co. established a manufacturing factory in this South Asian country. As a result, Apple’s iPhone exports from India have grown rapidly.
Authorities now want to build on that momentum by creating a broader supply chain for smartphone makers, who import the majority of electronic components from countries including China.
Some of the components being targeted by the proposed subsidy include microprocessors, memory, storage, multi-layer printed circuit boards, camera components such as lenses and lithium cells, one person said. ion. ion. Another person said subsidies may vary depending on the component.
Madhavi Arora, chief economist at Emkay Global Financial Services, said: “This is one of the key ways to encourage companies to participate in global value chains, although the benefits will only be evident in the center. and long term”. “Previous subsidies in this area have created efficiencies and this is how the government can build on efficiency.”
Government think tank Niti Aayog said in a report last year that the government should rationalize customs duties and offer financial incentives to boost electronic components manufacturing in India. The South Asian country faces stiff competition from rivals such as Vietnam in attracting foreign businesses looking to diversify their supply chains from China.
According to research by Niti Aayog, India’s current tariffs on electronic components – ranging from 0 to 20% – are about 5%-6% higher than countries like China and Malaysia.
