The government is also targeting 80% local value addition in IT gear in 5-10 years.
Not just IT hardware, India is trying to manufacture many other goods domestically. Yesterday, Prime Minister Narendra Modi inaugurated the TATA Advanced Systems Limited (TASL) Campus in Vadodara which will manufacture C-295 defence transport aircraft in collaboration with Airbus, the first private sector final assembly line for military aircraft in India. Under the C-295 programme, 16 aircraft will be delivered directly by Airbus from Spain and remaining 40 will be made in India. TASL is responsible for making these 40 aircrafts in India in partnership with Airbus.
The local manufacturing of this aircraft will add to India’s growing aviation industry and expand the aviation manufacturing ecosystem which is vital for India’s plans of manufacturing commercial aircraft domestically.
The aircraft plant comes after another big Make in India project for semiconductors under which India Semiconductor Mission has approved five semiconductor units which will all receive central and state government subsidies with a total outlay of Rs 76,000 crore.
India is trying to build domestic manufacturing capacity at a breakneck speed.Sops for phone parts production on cards
The government plans to incentivise production of 12 of the 30 component sub-assemblies that go into making a mobile device, a senior official told ET a few months ago. This is part of a big upcoming incentive scheme to develop a local ecosystem for electronic components. Sops will be linked to a combination of production, capex and employment generation, given the government’s renewed focus on job creation. “This will set the new template for the manufacturing sector,” said the official. China‘s value-add is currently in the range of 30%. India’s target is to have 25-30% value add in about seven years, the official told ET.
India has achieved significant scale in manufacturing of mobile phones in the past 10 years and is working to deepen value addition and widen focus to include IT hardware, servers and chips. India hopes to gain from a major shift of the world’s electronics supply chain from countries such as China. Some of the sub-assemblies identified include cameras, printed circuit boards, speakers and mikes, display and chip sub-systems. The idea is to focus on the end-to-end ecosystem in the sub-assemblies, instead of having an open-ended component scheme. “We think, of the 12 sub-assemblies, we will be world leader in three, and a dominant player in around five,” the official said.
Mobile phone manufacturing in India in value terms jumped 21-fold in the last 10 years to Rs 4.1 lakh crore in FY24, as government policy measures such as production-linked incentives (PLI) played a critical role in attracting global players to boost local production, as per industry body ICEA.
India has also become the second-largest mobile phone manufacturer after China, with cumulative shipments of locally produced handsets crossing 2 billion units during 2014-22, Counterpoint Research said. Local value addition in mobile phone manufacturing, however, stands at 15% at present.
Apple Inc.’s iPhone exports from India jumped by a third in the six months through September, underscoring its push to expand manufacturing in the country and reduce dependence on China. The US company exported nearly $6 billion of India-made iPhones, an increase of a third in value terms from a year earlier, people familiar with the matter told Bloomberg, asking not to be named as the information is private. That puts annual exports on track to surpass the about $10 billion of fiscal 2024.
Electronics component manufacturing scheme
The government has proposed to allocate up to Rs 40,000 crore for the electronics component manufacturing scheme, likely to be rolled out later this year, ET has reported. As per initial discussions between stakeholders, the scheme is likely to be a capital expenditure subsidy in some cases, an operational expenditure subsidy in others, and a mix of both as and where necessary. Of the Rs 40,000 crore, about Rs 19,800 crore is likely to be allocated as subsidy for operational expenditures and roughly Rs 13,000 crore for capital expenditure subsidy.
Of India’s total electronics imports, 60-70% are of components and sub-assemblies, which go into the making of products such as mobile phones, televisions, laptops and personal computers.
Policy to promote local 5G gear production
The Department of Telecommunications (DoT) has recently incorporated a clause in the latest public procurement policy order to ensure preferential treatment to domestic companies that achieve scale and capacity of such products to boost manufacturing of locally developed 5G technology products. The move will allow local companies to have an edge over their global counterparts in public sector contracts for 5G gear procurement.
While issuing the draft guidelines on public procurement with preference to ‘Make in India’ rules, the DoT had identified 36 products that must have over 50% local value addition to be eligible for procurement by the central government and its affiliated entities. But 5G products were excluded from the list, on which local players raised concerns.
R&D for electric vehicle subsystems
India’s electric vehicle (EV) industry is dependent largely on imports of various components and subsystems. The central government is working on a dedicated programme to fund research and development (R&D) of subsystems required for an EV, ET has reported recently.
The goal is to aid research in electric drive train with motors and drive controllers, EV charging infrastructure with multiple charging options in various voltage and current levels, grid disturbances due to EV and battery management systems with safety and intelligence, among others. Under the proposed plan, MeitY will have the right to take over ownership of intellectual property rights (IPR) arising out of the project. IPR transfer to the private industry may be considered based on contribution by them, an official told ET.
White goods PLI
The department for promotion of industry and internal trade (DPIIT) last month asked white goods manufacturers to participate in large numbers to avail fiscal benefits under the production linked incentive scheme for the sector as the response has been muted so far. Additional Secretary in the DPIIT Rajeev Singh Thakur said that the department has again reopened the application window for the PLI (production linked incentive) scheme for white goods (ACs and LED lights).
So far, 66 applicants with committed investment of Rs 6,962 crore have been selected as beneficiaries under the PLI scheme. The Union Cabinet had given approval for the PLI scheme for white goods for manufacturing of components and sub-assemblies of Air Conditioners (ACs) and LED lights on April 7, 2021. The scheme is to be implemented over a seven-year period, from 2021-22 to 2028-29, and has an outlay of Rs 6,238 crore.