The Indian government is weighing up a subsidy plan worth INR230 billion ($2.7 billion) alongside slashing tariffs on electronic components, in its latest bid to bolster local production, Bloomberg reported.

The Ministry of Electronics and IT proposed the fund to encourage the manufacturing of electronic components including batteries and camera parts, with hopes to boost the local production of smartphones manufactured by vendors like Apple. The proposed subsidies are set to be differentially allocated for components including microprocessors, memory storage, lithium-ion cells and camera lenses.

The plan also includes a recommendation to lower tariffs on certain electronic components, a move that could lower production costs and make India a more competitive manufacturing hub, a source explained.

Government think tank Niti Aayog claimed current tariffs levied on electronic parts in India can be as high as 20 per cent, and potentially 5 to 6 per cent higher than those of competitor countries like China and Malaysia.

Five-year pledge
The incentives underscore a long-running effort from Prime Minister Narendra Modi’s government to attract manufacturers to the country and reduce reliance on imports, especially from China.

Indeed, India made a five-year pledge in 2020 to invest $6 billion in handset production, a project which is now coming to an end.

A final decision on the proposed plan will be made by the cabinet, with an announcement expected in the country’s February budget if approved.