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India bets billions on breaking China’s grip on smartphone manufacturing

India has launched a ₹625 billion ($6.5 billion) incentive program to boost smartphone manufacturing, aiming to decrease its reliance on China. The initiative includes additional funding for semiconductor manufacturing, aiming to capture a larger share of the global electronics supply chain. Apple's increasing production in India exemplifies this shift, but the country still faces significant challenges in surpassing China's dominance in smartphone production.

Key points

  • India launches a ₹625 billion ($6.5 billion) Mobile Phone Manufacturing Scheme to enhance smartphone production and reduce reliance on China.
  • The program offers incentives between 2.25% to 5% based on sales, plus an additional 1.5% for sourcing parts locally.
  • India commits ₹1.28 trillion ($13.3 billion) to improve domestic semiconductor manufacturing, in addition to a previous $10 billion program launched in 2021.
  • India aims to increase its share of global smartphone production from 18% to 35%-40% by fostering local brands and capturing more supply chain value.
  • The program is expected to create 60,000 direct jobs and boost mobile production to ₹39 trillion ($405 billion) by 2031.
  • India has attracted brands like Apple and Vivo, but still lags behind China, which accounts for 63% of global production.

Why it matters

  • India's initiative reflects a global trend toward diversifying supply chains, especially after disruptions caused by the COVID-19 pandemic.
  • The push for self-reliance in manufacturing aligns with current IT trends emphasizing local production and reduced dependency on single countries.
  • India's strategy mirrors strategies by other nations, like the U.S. and European countries, which are also incentivizing local tech manufacturing to strengthen their economies and security.

India's new smartphone manufacturing initiative represents a significant effort to reduce Chinese dominance in electronics, potentially transforming the country's role in the global supply chain, but challenges remain in developing local expertise and components.