InvestorQ : How are the latest incentives by the Modi government for Make in India working?
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How are the latest incentives by the Modi government for Make in India working?

Answer
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Rashi Mehra answered.
2 months ago


By the look of it, India’s grand plan to entice global MNCs from China to India appears to be working in the right direction. Some of the biggest mobile phone manufacturers ranging from Samsung to the key partners of Apple are evincing interest in shifting to India.

Modi had recently announced that electronics manufacturers would be eligible for incentives to the tune of 4-6% of incremental sales over next 5 years. That combined with the PLI appears to be working as more than $1.5 billion has been committed.

Apart from Korean giant, Samsung, other key players like Hon Hai Precision, Foxconn, Wistron and Pegatron have also evinced interest. The government has also extended similar incentives to the pharmaceutical sector and will soon extend to automobiles, textiles and food processing too.

This move has come at the right time as companies were looking to diversify supply chains out of China. Vietnam may be the most favoured destination, followed by Cambodia, Myanmar, Bangladesh and Thailand, but India’s market size is a salivating prospect.

Government estimates that the incentive program will result in electronics manufacture in India alone to touch $153 billion worth over 5 years and create 1 million jobs. It will bring in $55 billion of additional investments into India and boost GDP growth by 0.5%.

The government plans to enhance the share of manufacturing in the economy from 15% to 25% via the Make in India program. In that direction, the recent output-linked incentive plan or PLI could be a big game changer for India.