An epicenter for such evaluations is high-tech and consumer electronics manufacturing and supply networks. Now, the government of India has announced a move that aims to boost chances for becoming a high-tech electronics manufacturing hub.
NikkeiAsia reported this week that the country will provide financial subsidies to 16 manufacturers of mobile phones and electronic parts for either moving or increasing production activity within its borders. The companies mentioned include Samsung Electronics, Hon Hai Precision (Foxconn), Pegatron, and Wistron, the latter three being assemblers of various Apple iPhones models. Further to be included in incentive offerings are indicated to be five India based smartphone makers and six domestic electronics component makers.
India’s termed Production Linked Incentive program was initially established in April to revitalize high-tech manufacturing. This program provides a five-year horizon where approved companies can receive subsidies that are reportedly equivalent to 4 to 6 percent of sales above a base year of fiscal 2019. The report indicates that overall, such incentives could amount to $143 billion if approved manufacturers make their milestones over this program’s five-year period. The equivalent amount of potential job growth is reported to top 200,000 over the same period.
In June of this year, the Chairperson of Foxconn, the globe’s largest contract manufacturing services provider reaffirmed plans to step-up capacity investments in both Taiwan and India to essentially redouble efforts to diversify production outside of China.
A year prior, at Foxconn’s first annual shareholders meeting, this provider told The Wall Street Journal that it was prepared to move production out of China if customers such as Apple required such a move.
By August, Nikkei Business Review had reported that Foxconn indicated: “nearly one-third of its production capacity was now outside of China, a figure that will likely keep growing due to the “inevitable” decoupling of Chinese and American supply chains.” In our Supply Chain Matters blog commenting on this statement, we indicated our viewpoint:
“…the indication seems rather succinct that more regional manufacturing options are being requested by rather influential high tech and consumer electronics design and manufacturing firms. Indeed, there are notions that tensions among the U.S. and China are perceived to be worsening, and for Taiwan based Foxconn to acknowledge such is a rather big deal.”
Also keep in mind that India continues to represent a significant smartphone and consumer electronics market region.
Coupling’s this week’s formal announcement relative to India’s monetary incentives based on sourced production volume growth, and the implication that now both Samsung, and Apple’s key contract manufacturers are approved for participating in such incentives, both manufacturers representing significant global market sales, one can certainly surmise that a regional manufacturing strategy within Asia is indeed unfolding, and the monetary stakes are significant. China’s own major smartphone manufacturer’s Huawei, Oppo, Vivo and perhaps, Xiaomi will more than likely continue to source supply networks within China.
Thus, the strategies of product manufacturing and supply network resiliency are indeed playing out. As the major market influencers go, so may the majority of other players.
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