India’s Ambitious Move: Drawing Electronics Component Players from South Korea, Taiwan, and the US

India is working on a plan to support its electronics manufacturing industry and reduce dependency on countries, like China, Thailand, and Vietnam. The government is developing a production-linked incentive (PLI) scheme for electronic components.

More About the India Move in Drawing Electronics Component

Officials mentioned on February 19 that the goal of this scheme is to attract players in component manufacturing from countries such as China, South Korea, Taiwan, and the US. These companies currently have manufacturing operations in China and may consider setting up production units in India.

A senior official from the IT ministry explained, “Many component manufacturers are based in China. However, there are also companies from South Korea, Taiwan, and the US. Our aim is to encourage them to establish their presence in India and strengthen the local component ecosystem.”

India’s target is to achieve $300 billion worth of electronics manufacturing by 2026 with $18 billion allocated for components. The government’s primary focus through the PLI scheme is to localize a portion of mobile handset components. The scheme is expected to receive an allocation of around ₹20,000 crores with details subject to discussions with industry stakeholders.

“We plan to include components, in the Bills of Material (BoM) and substantially increase local value from the current 15 percent. We are gathering feedback, from industry experts by consulting with them to develop a plan” explained the official. A different senior official from the ministry stressed the government’s dedication to safeguarding the electronics manufacturing environment, supported by the PLI initiatives, for devices and IT equipment.

The Ministry of Electronics and IT (MeitY) has solicited a comprehensive list of electronics components from the industry to expand the domestic manufacturing ecosystem. Additionally, it seeks to identify challenges and barriers hindering local component manufacturing. In a letter dated February 6, Xiaomi urged the Indian government to implement “confidence-building” measures to encourage local operations by component suppliers. Xiaomi also highlighted concerns among smartphone component suppliers regarding the government’s stringent scrutiny of Chinese companies.

Responding to Xiaomi’s concerns, the official acknowledged existing challenges and assured efforts to address them. The government has established mechanisms to expedite visa approvals for manufacturers from China, recognizing the importance of fostering an environment conducive to foreign investments in India’s manufacturing sector.