You are here: Home » Companies » News
Business Standard

India sees $16.8-bn electronic manufacturing proposals

Govt has received 156 proposals with investment commitment of $16.8 bn in the last 20 months, says IESA

Alnoor Peermohamed  |  Bengaluru 

Workers at the factory in Chennai
Workers at the factory in Chennai

India has witnessed a six-fold jump in proposed investments in local electronic manufacturing to Rs 1.14 lakh crore ($16.8 billion) as global firms such as Samsung, LG and Foxconn set up factories in the country, among the world’s largest markets for smartphones and set top boxes.

The government has received 156 proposals with investment commitment of Rs 1.14 lakh crore in the last 20 months, said India Electronics and Semiconductor Association (IESA), the grouping that promotes local manufacture of computer hardware and electronic items. “Many major well-known global brands are a part of this proposal,” said MN Vidyashankar, president of the IESA. He declined to elaborate on specific investments citing confidentiality.

India is also pushing for more local buying of defence electronics and avionics as part of its overall indigenisation efforts in defence and aerospace. The IESA said the new investment proposals were received under the Modified Special Incentive Package Scheme (M-SIPS) that looks at providing financial incentives to private companies for setting up electronics manufacturing units, helping grow India’s Electronics System Design and Manufacturing (ESDM) sector.

M-SIPS, which was rolled out as part of the National Policy on Electronics 2012, has now been extended until July 2020 as the government hopes to boost India’s electronics sector to $400 billion by then. India is expected to leapfrog the US and become the second largest market for smartphones in the world in 2016, making it worthwhile to manufacture the devices locally.

Further, the government’s move to increase duties on imported handsets is working well to make vendors consider local assembly if not local manufacturing.

The department of electronics and information technology (Deity) has also created an electronics development fund that is being managed by Canara Bank, said Vidyashankar.

Global electronic contract manufacturers are witnessing this shift. World’s largest contract manufacturer Foxconn, for instance, has pledged to invest $5 billion in India over the next five years, supporting not just smartphone makers but also other electronics vendors by manufacturing components. Foxconn's rival Flex, which has a significant presence in India, produces LED lights, electronic ballasts and GPS tracking devices for India's domestic market.

“Flex Chennai has attained a new partnership with Lenovo (which also owns Motorola Mobility) to manufacture their smartphones in India. Flex Chennai is also manufacturing millions of set top boxes for a global brand in India,” a Flex spokesperson said in November.

Taking a leaf out of the auto sector where a single manufacturing plant can support a number of vendor units, clusters of electronics manufacturers are being setup.

The Indian government gave its final approval for five such clusters during 2015, while 18 more have received in-principal approval.

"There is tremendous increase in manufacturing activities due to Government of India's MSIP and PMA (Preference for Domestically Manufactured Electronic Goods) policies and all OEMs are looking for 'Make in India', which is to the advantage of companies such as Jabil," said a spokesperson for Jabil, a US electronic contract manufacturer.

"Jabil has near term plans to continue our investments, which will likely increase our overall investment to near $100 million since entering the market."

First Published: Wed, February 03 2016. 00:18 IST