India Lures Computer Producers From China With $1B Incentive: WSJ

  • India announced close to $1 billion in incentives to lure computer manufacturers, reduce the trade deficit, attain self-reliance in electronic goods, and become a chief global supplier as the world plans to shun China, the Wall Street Journal reports.
  • Apple Inc (NASDAQ: AAPL) might start iPad tablet production in India shortly in response to Indian incentives.
  • A reward program was approved to drive production of laptops, tablets, and other computers in India, including up to 4% cashback on sales, depending on production growth over the four years starting April.
  • The incentive program has direct and indirect employment generation potential for almost 180,000 people and a production valuation of $45 billion, with over 75% exported through March 2025.
  • The country is planning to introduce tariffs and perks to attract manufacturers.
  • The initiative is aimed to attract the top five global giants, which have been devised under discussion with the leading manufacturers. They include Apple and HP Inc (NYSE: HPQ).
  • The pandemic wreaked havoc on the economy, with the GDP contracting over 15% between March and September.
  • As a result, the government devised initiatives including relaxation on foreign investment restrictions, tax breaks, and other incentives to drive growth.
  • India imports over 80% of the laptops and tablets from China, which have climbed over 40% in the past five years to around $4.2 billion following higher online activities. However, Indian manufacturers have failed to compete with Chinese imports to pricing.
  • India might end up accounting for 20% of the world’s production of cellphones, laptops, and tablets under the initiatives.
  • The country expects the local production for laptop and tablet production to catch up similar to that of its smartphone industry as the latter has contributed to billions of dollars of investment and job creation.
  • Samsung Electronics Co Ltd (OTC: SSNLF) has set up its facility outside Delhi, and Foxconn Technology Co Ltd (OTC: FXCOF) is producing iPhones and high-end smartphones near Chennai.
  • China’s increasing labor costs, the geopolitical trade and security environment, and the COVID-19 pandemic could compel global companies to look at alternative destinations like India.
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