Report on Supply Chain Compliance 3, no. 11 (May 28, 2020)
The Indian government announced a productivity-linked incentives (PLI) scheme to attract electronics manufacturers to shift production to India. Apple Inc. is reportedly ready to shift some production from China to India that may boost Indian exports by around USD 40 billion.
The Indian Ministry of Electronics and Information Technology said that the Indian electronics markets suffer from a “lack of adequate infrastructure, domestic supply chain and logistics; high cost of finance; inadequate availability of quality power; limited design capabilities and focus on R&D by the industry; and inadequacies in skill development.”
The PLI scheme does not require companies to invest in India’s infrastructure, but rather maintain a certain level and value of production. The lack of infrastructure, as well as a clause in the scheme that values the entire plant and machinery already in use in facilities across China and other places at 40% of that value, may deter certain companies.
India’s announcement comes as companies are moving to diversify supply chains and create some resiliency in the face of trade wars and a pandemic that has caused major disruption to global supply chains centered in China.
1 “Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing,” Government of India, Ministry of Electronics & Information Technology, updated on April 9, 2020, https://bit.ly/3ga4znO.
2 Anandita Singh Mankotia, “Apple may take a bigger bite of India’s manufacturing pie,” ET Tech, May 11, 2020, https://bit.ly/3e5gxNz.