India drops clause to pave way for Apple, others to increase domestic production
The government has reportedly removed contentious clauses including the evaluation of plant and machinery to be brought from China and South Korea, which had been opposed mainly by Apple, paving the way for the iphone maker and others like Samsung, Foxconn, Oppo, Vivo, and Flextronics to make a larger play in local production using the production-linked incentive (PLI) scheme. “The empowered committee of secretaries met recently and decided to remove the clause, which evaluated plant and machinery brought into India at 40% of its value, and has agreed to a few other changes so that manufacturing could shift to India in a big way,” an official aware of the discussions at the meeting was quoted as saying in a news report. The government is also in discussions with a third Apple contract manufacturer, Pegatron, to relocate part of its manufacturing to India, the official said in the report.
As per reports, through the scheme, India is trying to attract American investment with pressure on us companies now to diversify manufacturing out of China under the ‘China plus one strategy’. Among the changes agreed to recently were to include the industry in discussions before making any changes to the PLI scheme once these companies have invested and started producing in the country. “earlier, a clause permitted only the empowered committee to be able to unilaterally change the rules but investors had voiced concerns with this clause,” the official was quoted as saying. The other changes made include removal of various caps, including another clause which said the government would release the incentive despite the industry meeting its targets only if it had the money to do so. Instead, a clause on force majeure, which permits the companies to seek relief from the targets in time of natural calamities such as Covid-19, has been added. The government hopes to attract largescale smartphone manufacturing to India and raise exports out of India to over $100 billion by 2025 from under $3 billion right now.n