India wants to be a ‘partner of the global economy’ in its manufacturing push, minister says
India has the resources it needs to become a global electronics manufacturing hub and a competitive partner to the world economy, the country’s technology minister said.
The government on Tuesday introduced a $6.6 billion incentive scheme for international companies to ramp up their electronics manufacturing production in India.
“This whole scheme is industry specific, to make India a big hub of electronic manufacturing,” Ravi Shankar Prasad, minister for communications, electronics and information technology, told CNBC’s Tanvir Gill.
Electronics manufacturing — particularly the production and assembly of smartphones — is a cornerstone of Prime Minister Narendra Modi’s “Make In India” campaign. In recent years, that’s become more prominent as global tech companies are moving out of China to diversify their supply chain, going into places like Vietnam or India.
“When we talk of ‘Make In India,’ it does not mean India in isolation. It means an India, which is globally becoming competitive, as a partner of the global economy — India’s asset in service of the global assets,” he added.
Last month, Modi gave a speech underscoring the need for India to become self-reliant as the economy struggles to bounce back from the coronavirus pandemic. Some took that to mean a more protectionist India in the future.
India is one of the world’s fastest-growing smartphone markets and Modi’s government provided incentives for smartphone companies to set up factories in the country. Top smartphone makers including Samsung, Apple and Xiaomi have production centers and assembly lines in India for some of their handsets.
The government says India had two mobile phone factories in 2014 — the year Modi’s government came into power — and now it is the second-largest mobile phone producer in the world.
According to Prasad, manufacturers can tap into a gamut of India’s “IT power, the soft power, the start-up power, the human resource” that is available in abundance. That includes the relative ease of doing business in the country — which has improved in recent years — a competitive corporate tax rate and an “enormous” talent pool, he added.
″‘Make In India’ is not against any country, it’s only India positive, Prasad said.
One of the initiatives announced Tuesday said the government will provide production-linked cash incentives to companies, worth 4% to 6% of incremental sales over five years, on goods manufactured locally. Up to five international smartphone makers would be selected for the scheme. The rest of the schemes were aimed at stepping up electronic components production and improving the infrastructure available to companies.
“Many of the global brands are already in India, making large number of mobile phones. Therefore, they’ve seen the work of India,” Prasad said.
Prasad said the coronavirus has interrupted plans for 5G testing, which refers to the fifth generation of high-speed mobile internet that aims to provide faster data speeds and more bandwidth to carry growing levels of web traffic. The pandemic has affected more than 6 million people around the world and forced countries, including India, to shut down their economies temporarily.
“India is a huge market for 5G,” Prasad said, explaining that the country will resume experimenting with the technology once the virus outbreak is brought under control. “We have also to address (the technology’s) security concerns.”
Chinese telecommunication equipment supplier Huawei, which has a presence in India, is facing pressure from countries like the U.S., which banned the firm from participating in its 5G rollout due to security concerns. Huawei has denied its products pose any security risks.
When asked what India’s stance is on Huawei, Prasad said no company would be stopped from running 5G trials.
“The larger issue of who will be allowed or who will not be allowed is a question of policy and also our auction purposes. A call will have to be taken by India, consistent with our security perspective also,” he said.