New Delhi: Applications by iPhone contract makers Foxconn, Pegatron and Wistron as well as Samsung, Karbonn, Lava and Dixon to export mobile phones worth around $100 billion from India have been cleared by the empowered group, said people with knowledge of the matter.
“The empowered committee has approved all applications estimated to export around $100 billion (Rs 7.3 lakh crore) worth mobile phones under the production linked incentive scheme (PLI) and all the applications will be placed before the cabinet probably this week,” a senior government official told ET.
Members of the empowered committee include the Niti Aayog CEO along with the secretaries of economic affairs, expenditure, revenue, the Ministry of Electronics and Information Technology (MeitY), Department for Promotion of Industry and Internal Trade (DPIIT) and Directorate General of Foreign Trade (DGFT). Five of the applicants are overseas ones, seven are Indian and another six are in the components manufacturing scheme, officials said.
Apple’s contract manufacturers and Samsung have submitted production estimates of phones worth $50 billion each in the next five years, according to the applications, said people with knowledge of the matter. Exports will be slightly lower in each case.
Scheme was Notified in April “The extraordinary response to the PLI shows enormous trust of the global community in India’s manufacturing capability and leadership of Prime Minister Narendra Modi,” Communications & IT minister Ravi Shankar Prasad told ET. The PLI scheme, which aims to make India a manufacturing hub for smartphones, was notified in April. Apple’s contract manufacturers started producing its latest handset models, the iPhone 11 and iPhone SE, shortly after that in India. The scheme is aimed at attracting manufacturers looking to move out of China amid Sino-US trade tensions, and even looks to draw companies from manufacturing hubs such as Vietnam. While Foxconn and Wistron already have plants running in India, Pegatron — Apple’s second-largest contract manufacturer — is looking to set up its factory and is talking to states such as Uttar Pradesh, Tamil Nadu, Karnataka and Andhra Pradesh.
Meanwhile, Samsung, which now exports phones worth about $2.5 billion from India, is all set to ramp up its production to handsets worth $50 billion in the next five years. Of this, $40 billion will comprise devices with a factory price of more than $200.
“Samsung exporting $2.5 billion out of India — of this, 97% was in the below $200 segment. By putting this floor price of $200 for eligibility in the PLI scheme, we have incentivised them to make high-value phones in the country and now they will be vacating this space of less than Rs 15,000 factory price for Indian players to occupy,” said the first official cited above. “This is an important stage as it will ensure that Indian players are able to climb up the learning curve and start making world-class smartphones to compete globally.”
The five global applicants are Samsung, two units of Foxconn, Wistron and Pegatron. The domestic ones are Lava, Dixon, Micromax, Padget Electronics, Sojo, Karbonn and Optiemus. According to government data, 22 companies had applied for the Rs 41,000-crore PLI scheme.
New Delhi: The government is likely to offer major rebates on revenue share to winners of commercial coal block auctions in order to attract investments from local and global miners. This follows the announcement on Saturday by finance minister Nirmala Sitharaman on liberalising commercial coal mining as part of the Rs 20-lakh crore Atmanirbhar Bharat stimulus. Companies that start early production from the blocks will be offered 50% rebate on revenue share payable to the government. The rebate will start from the day of production till the scheduled commencement date of mining agreed at the time of awarding of the block, sources said.
Similarly, a rebate of 50% of revenue share is proposed to be given on coal produced in excess of the scheduled target in a financial year. A further rebate of 20% is proposed on coal used for gasification or liquefaction, they said. “The rebate rates have been increased substantially considering the need for investments in the country as being sought under the Atmanirbhar Bharat stimulus,” aperson in know of the development told ETon condition of anonymity. Earlier the government’s revenue share was proposed to be reduced by 10% if the winning bidder starts the mine a year earlier than the agreed timeline and by 20% if production starts two years ahead of plan. The Union Cabinet this week is likely to consider the revenue-sharing model of auction for coal and lignite mines. The coal ministry expects to start auction of about 50 coal blocks, including some large mines, within 10 days of Cabinet approval.
Given the easy entry and exit norms, the government expects participation from Indian companies such as Hindalco, Jindal Steel & Power, JSW Energy, Adani Group and Vedanta, and global miners like Peabody, BHP Billiton and Rio Tinto. The government also proposes to increase the tenure of Coal India contracts for raw coking coal to up to 30 years as an import substitution measure. The revenue-sharing model is based on recommendations of an expert committee headed by former chief vigilance commissioner Pratyush Sinha that was formed after the fourth and fifth rounds of auctions received atepid response from the industry. Ramanuj Kumar, partner, Cyril Amarchand Mangaldas said doing away with eligibilty criteria and introducing revenue share is expected to attract more players in coal mining. “However, getting investors for partially explored blocks may prove challenging,” he said.
Bhubaneswar: The country’s ultra mega solar parks have offered potential investors an opportunity to join $500-700 billion renewable energy and grid infrastructure investment boom in the coming decade, a study noted.
“The ultra-mega solar parks have attracted foreign capital as well as top global developers to India and in return have provided investors with an opportunity to join a $500-700 billion renewable energy and grid infrastructure investment boom in the coming decade”, said Kashish Shah, research analyst at IEEFA.
India now has a capacity of 1 Gw across multiple ultra-mega solar parks, two of which are the largest commissioned in the world.
The Bhadla solar park in Rajasthan is the world’s largest such installation to date, covering more than 14,000 acres with total capacity of 2245 Mw.
The ultra-mega power plant (UMPP) concept involves a state government or local distribution company providing a single central grid connection and acquiring land on which the project can be built, shielding developers from procurement and time-delay risks.
“This approach has driven economies of scale and attracted global capital into India’s renewable energy sector over the last five years, with an immediate boon in mid-2017 of halving solar tariffs to a record low of Rs 2.44 per kWh ($39/MWh) at the prevailing exchange rate,” said Shah.
India pioneered the concept of the ultra mega power plant (UMPP) in a single solar industrial park. In 2016, the Ministry of New and Renewable Energy (MNRE) initially set a target for 40 industrial solar parks with a combined capacity of 20 GW, and in 2017 doubled this target to 40 GW by 2022.
According to the report, utility-sale solar parks in India have successfully overcome the three major risks associated with renewable energy development in India, namely project execution risk, off-taker risk and operation and maintenance risk.
The country’s land acquisition process is one of the most critical roadblocks to infrastructure projects. But, the state government renewable development energy agencies have helped in acquiring large-scale government and privately-owned land for the solar parks. The solar parks also have cushioned developers from the hassles of arranging the connection of generation units to the nearest sub-station.
Besides, the introduction of reverse bidding auctions has helped curtail prices. In reverse bidding auctions, developers bid for the lowest attainable tariff at which to supply power. The auction mechanism drives prices down by promoting competition, but also has introduced transparency and efficiency in the process of contracting new renewable energy capacity.
Mumbai: Maharashtra is seeking to attract investment from companies by enhancing ease of doing business in the state while deciding against relaxing labour laws, unlike Uttar Pradesh and Madhya Pradesh, in the wake of the restrictions forced by Covid-19. State industry minister Subhash Desai said on Wednesday that companies investing in Maharashtra will not have to run around to get permissions but will get a single ‘mega permission’ to invest in the state, adding that the government is also looking to unveil a financial package for industries in the state. The move means industries would no longer have to seek separate clearances for power, water and other requirements.
A state government official said that once given the nod industries can start work while the rest of the clearances would be done in due course. He said this scheme was only for non-polluting industries. Desai said the state would also create a labour bureau which woould compile a list of workers and grade them as per their skills. The graded list would have skilled, semi-skilled and unskilled workers. Maharashtra has decided to appoint senior IAS officer Bhushan Gagrani as a ‘sherpa’, as private banks do, to interact with companies and help facilitate their investment and address their issues.
Gagrani’s task would be to prepare a blue print for government in order to attract more FDI from Japan, US, Korea and Germany. However, unlike Uttar Pradesh and Madhya Pradesh, which have relaxed labour laws, Maharashtra is not considering this option. “We need to have a balance between industrial growth and labour reforms,” said an official on condition of anonymity.
New Delhi: Even as the Narendra Modi-led central government looks at measures to support the economy amid a global coronavirus crisis, the Union commerce and ministry could be planning a tax holiday for companies that bring new investments, suggests a Bloomberg report citing unnamed sources.
The finance ministry is said to be evaluating the proposed tax holiday of 10 years, which might apply to companies making more than $500 million worth of new investments.
According to Bloomberg, the companies will need to start operations within three years from June 1 and cover sectors like medical devices, electronics, telecom equipment and capital goods to be able to avail of the benefits.
The report also speaks of another plan, where a four-year tax holiday would be given to companies investing upwards of $100 million in labour-intensive sectors like food processing, textiles, leather and footwear. Additionally, a lower corporation tax is said to be planned for next six years, at the rate of 10 per cent. The finance ministry has yet to take a final decision on this, says the report.
BENGALURU: The Karnataka government on Monday set up a task force to attract multinational corporations (MNCs) willing to move out of China in the aftermath of the covid-19 outbreak, which had its epicentre in Wuhan.
“There is a pushback against China by several countries. Rising labour costs, shortages of workforce, a trade war with the United States, the rise of manufacturing hubs in South-East Asia and now a pandemic that originated on its mainland, China may not be able to retain its position as the world’s factory in the post-covid global economic order,” the state government said in its order while announcing the move.
The task force will be headed by Karnataka chief secretary T.M.Vijay Bhaskar.
The state government said the task force was being set up “for attracting investments and to woo disenchanted multinational companies looking to shift their manufacturing bases away from China in the backdrop of the coronavirus outbreak.”
The formation of the task force is in line with the state’s “compete with China” policy.
The move comes at a time when Karnataka is also deliberating on relaxing labour laws and other hurdles to revive industries and businesses which have been hit hard by a nearly 50-day lockdown.
Uttar Pradesh, Gujarat and Madhya Pradesh have already relaxed labour laws to attract investments.
Karnataka is hoping to capitalise on a global trend wherein countries like the US, Japan and South Korea have asked their companies to relocate from China.
Japan is reportedly paying its companies to shift out of China.
Karnataka was gearing up to host its global investors meet in November and has made it easier for industries to purchase land in the state. It also wanted to roll out a new industrial policy to attract investments. It has proposed country-, and industry-wise clusters in the state to create ecosystems that will bring in more investments. Senior officials in the state industries department said these clusters would make Karnataka more attractive for global investors.
India is seeking to lure U.S. businesses, including medical devices giant Abbott Laboratories, to relocate from China as President Donald Trump’s administration steps up efforts to blame Beijing for its role in the coronavirus pandemic.
The government in April reached out to more than 1,000 companies in the U.S. and through overseas missions to offer incentives for manufacturers seeking to move out of China, according to Indian officials who asked not to be identified, citing rules on speaking with the media. India is prioritizing medical equipment suppliers, food processing units, textiles, leather and auto part makers among more than 550 products covered in the discussions, they said.
Trump’s move to blame China for its handling of the Covid-19 outbreak, which has killed more than a quarter-million people worldwide, is expected to worsen global trade ties as companies and governments move resources out of the world’s second-largest economy to diversify supply chains. Japan has earmarked $2.2 billion to help shift factories from its neighbor, while European Union members plan to cut dependence on Chinese suppliers.
India expects to win over U.S. companies involved in healthcare products and devices, and is in talks with Medtronic Plc and Abbott Laboratories on relocating their units to the country, an official said. Medtronic spokesman Ben Petok and Abbott spokeswoman Darcy Ross didn’t immediately respond to emails seeking comment.
Both Medtronic and Abbott have a presence in India, which may make it easier for them to move their China supply chains to the country, according to an official. They’re based out of financial center Mumbai and already work with large Indian hospital groups.
Officials have told companies that India is more economical in terms of securing land and affordable skilled labor than if they moved back to the U.S. or Japan, even if overall costs are still higher than China. They have also offered an assurance that India will consider specific requests on changes to labor laws, which have proved a major stumbling block for companies, and said the government is considering a request from e-commerce companies to postpone a tax on digital transactions introduced in this year’s budget.
India’s trade ministry spokesman didn’t respond to an email seeking comment on the effort to lure U.S. companies.
The push by Prime Minister Narendra Modi’s government comes as India tries to regain lost ground after many companies chose countries like Vietnam over India as an alternative destination when Trump started his trade war with China. Modi has tried to shore up U.S. investments and improve ties through corporate tax cuts, two massive public rallies with Trump in Houston and India, and a $3 billion defense deal.
Secretary of State Michael Pompeo last month said the U.S. was working with India, Australia, Japan, New Zealand, South Korea and Vietnam on how to “restructure these supply chains to prevent something like this from ever happening again.” The administration was “turbocharging” an initiative to remove global supply chains from China, Reuters reported this week, with one official saying it’s pushing for an “Economic Prosperity Network” of trusted partners.
“My read is that the network, if it pans out, will look to India and Vietnam to replace China in the global supply chain network,” said Derek Grossman, researcher at the Washington-based RAND Corporation who held positions in the U.S. Intelligence Community for more than a decade. “This would be a rough fit in terms of replacing China’s immense manufacturing capabilities, but perhaps the U.S. has high hopes that India and Vietnam can quickly ramp up to at least equal Chinese capacity.”
India in April partially lifted a ban on the export of hydroxychloroquine and paracetamol following a request from Trump. It also approved 130 billion rupees ($1.7 billion) worth of investments to make more bulk drugs and medical devices, and to boost local manufacturing of drug intermediates and active pharmaceutical ingredients to cut dependence on imports from China.
For Modi, a surge in investment would help shore up an economy battered by an eight-week nationwide lockdown to control the Covid-19 outbreak, and help him make up ground hitting a target to grow its manufacturing sector to 25% of gross domestic product by 2022 from 15%. The need to create employment is now even more urgent after the pandemic left 122 million people jobless and forced India to shut down all major cities.
It could also present India with a chance to finally push through long-stalled reforms on land, labor and taxes that have hindered investment for years. Modi’s second term has been marred by nationwide protests and slow growth since his party scored a landslide election victory a year ago, presenting a risk for companies planning to move.
“There are opportunities for India to try to gain a place in global supply chains, but this will require serious investments in infrastructure and governance,” said Paul Staniland, an associate professor at the University of Chicago who writes about India’s politics and foreign policy. “India faces tough competition from elsewhere in South and Southeast Asia.”
India’s trade ministry has sought detailed feedback from U.S. companies on changes needed to make the country’s tax and labor laws more favorable to companies, said one of the officials. Modi’s federal government is working with states to ensure long term solutions, the official added, including developing land banks to ensure a quick start for units.
“India is a bigger market than Vietnam or Cambodia so it should be a bigger draw for investors looking to move operations out of China,” said Ajay Sahai, director general and chief executive officer of the Federation of Indian Exporters. “But apart from ensuring land, water and sewerage, the most important change India needs to make is to give a clear guarantee that the government will not introduce retrospective tax amendments.”
Some states including Maharashtra have ensured that supply chains for foreign manufacturers remained functional through India’s national virus lockdown. Others like Tamil Nadu in the south and Uttar Pradesh in the north have offered concessions for those planning to move.
“There’s abundant capital in the U.S. that’s looking for geographies outside, and we can see India responding,” said Mukesh Aghi, president of the U.S.-India Strategic and Partnership Forum, a Washington-based group that advocates for policies that further business ties between the countries. “Companies realize that while large supply chains in China may have been economical, there’s no point in keeping all your eggs in one basket.”
New Delhi: The government is working on a package of structural reforms across sunrise sectors to convert India into a global manufacturing and exporting hub, Niti Aayog CEO Amitabh Kant said.
In an interactive online session organised by All India Management Association (AIMA) on post-coronavirus scenario for Indian economy, he listed healthcare, education, mobility, genomics, AI, 5G network, fintech and manufacturing as high priority areas for rapid and radical structural reforms.
“These are the new areas of growth where disruption is inevitable and where speed, scale and size are required,” Kant was quoted as saying in a statement by the AIMA. Manufacturing would be a key focus area for the government in the post-Covid period, as India wants to take advantage of the supply chain disruptions in China, Kant said.
India is developing a land pool nearly double the size of Luxembourg to lure businesses moving out of China, according to people with the knowledge of the matter.
A total area of 461,589 hectares has been identified across the country for the purpose, the people said, asking not to be identified because they aren’t authorized to speak to the media. That includes 115,131 hectares of existing industrial land in states such as Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh, they said. Luxembourg is spread across 243,000 hectares, according to the World Bank.
Land has been one of the biggest impediments for companies looking to invest in India, with the plans of Saudi Aramco to Posco frustrated by delays in acquisition. Prime Minister Narendra Modi’s administration is working with state governments to change that as investors seek to reduce reliance on China as a manufacturing base in the aftermath of the coronavirus outbreak and the resultant supply disruption.
At present, investors keen on setting up a factory in India need to acquire land on their own. The process, in some cases, delays the project as it involves negotiating with small plot owners to part with their holding.
A call to the spokesman of the Ministry of Commerce and Industry went unanswered. Providing land with power, water and road access may help attract new investments to an economy that was slowing even before the virus hit, and is now staring at a rare contraction as a nationwide lockdown hit consumption.
The government has hand-picked 10 sectors — electrical, pharmaceuticals, medical devices, electronics, heavy engineering, solar equipment, food processing, chemicals and textiles — as focus areas for promoting manufacturing. It has asked embassies abroad to identify companies scouting for options. Invest India, the government’s investment agency, has received inquiries mainly from Japan, the U.S., South Korea and China, expressing interest in relocating to the Asia’s third-largest economy, the people said.
The four countries are among India’s top 12 trading partners, accounting for total bilateral trade of $179.27 billion. The foreign direct investments by the four nations between April 2000 and December 2019 stands at over $68 billion, government data shows.
Making unused land available in special economic zones, which already have robust infrastructure in place, is also being examined. A detailed scheme for attracting foreign investments is expected to be finalized by end of the month, the people said.
States have been separately urged to evolve their own programs for bringing in foreign investments. The Prime Minister held a meeting on April 30 to discuss steps to fast-track strategies for wooing investors.
Andhra Pradesh, a southern Indian state, is in touch with several companies from Japan, the U.S. and South Korea.
“We have the advantage of coastline and ready-made industrial parks with necessary clearance,” Rajat Bhargava, special chief secretary of the state’s revenue department, said by phone. “We are focusing on certain sectors like IT and related manufacturing, food processing, and chemicals and have been holding video conferences with investors.”
The northern state of Uttar Pradesh is also developing an online system for land allotment for all industrial and commercial purposes and is in talks with global companies for attracting investments in sectors such as defense and aerospace.
Chandigarh: The state of Haryana has chalked out an aggressive strategy to woo the multi national companies intending to either shift from China or setting up of a new manufacturing facility in India.
As a part of the plan Principal Secretary to Chief Minister, Rajesh Khullar, shall hold an open house with potential investors from 3 pm to 4 pm everyday on 6th , 7th and 8th May from 3 pm to 4pm everyday through webinars.
A number of US, Japanese, Korean and Euro Zone Companies are proposing to shift their plants from China or set up additional manufacturing facilities to other locations in South Asia.
The Government of Haryana has prepared a strategy to create windows in the existing state policies that would ensure quick setting up of manufacturing facilities in any industrial estate of the choice of investors wanting to shift base from China.
Government is reaching out to these Companies to understand their individual requirement in terms of land area, payment terms, incentives sought and business facilitation sought.
This is being done through a series of meeting through video conferencing on 6th, 7th & 8th of May 2020 with the potential Investors/ Companies. Mr. Rajesh Khullar, PSCM-cum-Chairman HSIIDC, Mr. A K Singh, Principal secretary Industries and Mr. Anurag Agarwal, MD HSIIDC would also be present during the interactions. Based on the interactions, tailor made solutions would be offered to such Investors/ Companies. Haryana is one of the most industrialized states in the country being the leading producer of a number of industrial products. The state also enjoys advantage in terms of its unique location – surrounding the national capital Delhi from three sides. Besides the State has considerable presence of Japanese, Korean and US Companies.
While separate emailers are being sent to the identified Companies, interested Companies willing to join the Video Conferencing/Webinar can also send their requests on the email id email@example.com and they would be shared all the necessary details of the video conference.