Electronics manufacturers in India reportedly asking for timely incentive payment

Amid the global supply chain relocation, India is wooing investments to build a self-reliant electronics ecosystem. However, the Indian government is reportedly delaying the payment of subsidies, and manufacturers argue that India cannot improve its status in the global value chain without Chinese investments.

The Economic Times quoted sources as saying that multinational manufacturers are calling on the Indian government for an early release of payments due to them under India’s Production Linked Incentive (PLI) schemes. The report, citing the India Cellular and Electronics Association (ICEA), reported that delay or non-payment of the fund blocks the capital companies need for funding their CAPEX and OPEX.

According to the report, Dell, Wistron, Dixon Technology, and Netweb Technologies are among those impacted by the delayed payout.

The report quoted sources as saying that the PLI payments are delayed because the auditor team has changed several times, and every time a new team is appointed, the auditing process has to start from scratch. Furthermore, according to The Economic Times’ previous report, the Indian government is closely examing the invoices from Samsung Electronics, leading to the delayed release of incentives for other smartphone manufacturers, including Foxconn.

Besides, ICEA is asking the Indian government to allow smaller China-based components manufacturers’ investments, adding that the FDI policy needs to be clarified. Amid the China-India geopolitical tension, India amended its FDI policy in April 2020, allowing foreign direct investments from countries sharing land borders with India only with prior governmental approval.

According to the Press Information Bureau of India, thanks to policies such as PLI schemes, SPECS, and EMC2.0, India’s electronics production has grown at a CAGR of 17.9% from INR2.43 trillion (US$37 billion) in fiscal 2016 (April 2015 to March 2016) to INR5.54 trillion in fiscal 2021.

Rajeev Chandrasekhar, minister of state for the Ministry of Electronics and IT of India, told Lok Sabha (the lower house of the Indian parliament) that India’s electronics export has grown at a CAGR of 29% between fiscal 2018 and 2022, reaching INR1.17 trillion, Money Control reported.