“The new proposal will invite more phone makers to move manufacturing from China and Vietnam to India”
Union Finance Minister Nirmala Sitharaman has proposed a scheme for promoting local manufacturing of mobile phones, electronics and semiconductor packaging during the Budget 2020 on Saturday, The Economic Times reports. The new proposal will invite more phone makers to move manufacturing from China and Vietnam to India. Sitharaman said in her budget speech that India needs to boost domestic manufacturing. “There is a cost advantage for electronics manufacturing in India,” she said. The Union Finance Minister added that a detailed scheme outlining the new policy will be released soon.
This move by the government is to attract companies like Apple, Samsung and others major players to manufacture phones in India. Apple has currently manufactured with Wistron and Foxconn to manufacture iPhones in India. Last year, Apple started domestic manufacturing of iPhone XR in India, but the company still has to import some components from outside. India is the world’s second largest smartphone market, making it an attractive destination for brands to set up manufacturing plants.
The new policy could see import duty on smartphone components waived off, thereby freeing up some of the restrictions that have prevented phone makers from setting up manufacturing units in India. By locally producing smartphones, these companies will not have to pay taxes on imports. This could lead to wholly made in India phones to cost cheaper.
A report by ET in January stated hat the government could announce a Rs 36,000-crore fund to provide production-linked incentives (PLI) to smartphone makers. The government is targeting an increase in smartphone exports to touch $110 billion by 2025 from the current $3 billion.
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