A recent study reveals that India is eroding China’s dominance in electronics exports in some key markets as manufacturers diversify their supply chains away from the world’s factory to other parts of Asia.
The impact is majorly noticeable in the US and UK, which witnessed rising geopolitical tensions with China in recent years.
According to London-based Fathom Financial Consulting, India’s electronics exports to the US as a ratio of China’s rose from 2.51 percent in November 2021 to 7.65 percent in November 2023, while it increased from 4.79 percent to 10 percent in the UK.
With generous incentives including tax breaks, rebates, simplified land acquisition procedures, and financial support, the Indian government is trying to attract electronics manufacturers to the country.
The objective is to increase exports by growing the domestic manufacturing sector and assisting companies in expanding globally through partnerships.
India keeps adding to its outstanding record of significant announcements. Leading electronics firms have been enticed to the South Asian behemoth, which hopes to compete with China in global value chains, in recent years.
Notably, the production of Samsung’s Galaxy S24, Google’s new Pixel 8, and Apple’s iPhone 15 takes place in these giants’ facilities in India.
Tesla CEO Elon Musk is even thinking about establishing an electric car plant in India, while Apple represents the increasing number of multinationals taking a chance on India.
In 2017, the California-based tech giant started making entry-level iPhone models in India. With the support of Taiwanese companies including Pegatron and Wistron, it is able to increase its manufacturing capacity.
The largest mobile phone factory of Samsung Electronics Co. is located in India, while Apple uses Foxconn Technology Group and Pegatron as contract manufacturers to assemble and produce at least 7 percent of all iPhones made in the country.
JP Morgan analysts predict that India might produce one in four iPhones by 2025 as the country has already reached the milestone of manufacturing one in seven iPhones.
Making a decent start to reach its goal of tripling its electronics exports to $300 billion, India became a net exporter of mobile phones in 2020 after introducing hefty import taxes, which forced handset makers including China’s Xiaomi, to move production to the country.
According to Counterpoint research, following a long push to force companies to Make-in-India, local value addition, or the share of locally-sourced components, jumped to 17 percent from just 6 percent between 2016 and 2018.
Indian businesses have been promoting their involvement in the “China plus one” strategy of multinational corporations, which involves manufacturers creating backup capacity abroad.
Indian Prime Minister Narendra Modi, who has marketed his “Make in India” strategy as a means of boosting exports, creating jobs, and increasing economic independence by lowering the country’s reliance on imports, will benefit from India’s growing market share.
India is now mulling removing barriers to Chinese investments, provided the two countries’ shared border remains peaceful. The country also recently cut import duties on some smartphone components.
The Indian economy is growing fast, steadily and consistently beating market expectations as the country’s GDP expanded 8.4 percent in the December quarter from a year earlier, though the foreign direct investment (FDI) is lagging. There has been a frenzy of excitement since the giants arrived. Indians from the middle class, government officials, celebrities, and even prominent business people in the community are all proud of this new attraction.