India’s government is exploring new subsidies for manufacturers of electronic components and considering a reduction in import tariffs to enhance domestic production, particularly for smartphones produced by firms like Apple Inc.
The Ministry of Electronics and Information Technology (IT) has suggested allocating at least 230 billion rupees (approximately $2.7 billion) to support manufacturers involved in producing essential components such as batteries and camera parts, according to sources who requested anonymity due to the confidential nature of the discussions.
Additionally, the ministry has proposed lowering tariffs on certain electronic components—a move that aligns with industry demands aimed at reducing production costs.
A final verdict on these proposals will rest with the cabinet, and if they receive approval, specifics may be unveiled in the government’s forthcoming budget announcement scheduled for February.
Neither India’s Ministry of Electronics and IT nor the Finance Ministry responded promptly to inquiries seeking further details. The Economic Times of India previously reported on this subsidy initiative.
Under Prime Minister Narendra Modi’s administration, substantial financial incentives have been allocated to attract companies like Apple and Samsung Electronics Co. to establish manufacturing facilities within India. As a result, exports of Apple’s iPhones from India have surged significantly.
Authorities are now keen on capitalizing on this progress by developing a more extensive supply chain for smartphone manufacturers who currently rely heavily on imports from countries such as China for their electronic parts.
The proposed subsidies aim at various components including microprocessors, memory chips, storage devices, multi-layered printed circuit boards (PCBs), camera elements like lenses, and lithium-ion batteries. The amount of subsidy is expected to vary based on each component type.
“This initiative represents a crucial strategy for encouraging companies’ integration into global value chains; however, tangible benefits may only manifest over time,” remarked Madhavi Arora, lead economist at Emkay Global Financial Services. “Previous subsidies in this sector have fostered efficiencies that can serve as a foundation for future growth.”
In a report released last year by government think-tank Niti Aayog emphasized that rationalizing tariffs alongside providing fiscal incentives could significantly enhance electronic component manufacturing within India. The country faces stiff competition from nations like Vietnam which are also vying for foreign businesses looking to diversify their supply chains away from China.
Currently, India’s tariffs on electronics components range between zero and 20 percent—approximately five percent higher than those imposed by countries such as China or Malaysia according to research conducted by Niti Aayog.
