SOME of the world’s biggest tech companies, including Dell Technologies, HP and Apple supplier Foxconn Technology Group, have applied for state aid to manufacture laptops in India.

Indian Premier Narendra Modi’s US$2.1 billion financial incentive plan – a bid to boost local production of technology hardware such as laptops, personal computers, tablets and servers – has received an overwhelming industry response, Tech Minister Ashwini Vaishnaw said on Wednesday (Aug 30).

Under the plan, companies are entitled to cashback of almost 5 per cent of factory prices of finished products. Sourcing components locally will help manufacturers win more financial benefits.

Some 32 companies, including units of homegrown contract manufacturers such as Optiemus Electronics and Dixon Technologies India, had applied for the incentives before the application process closed at midnight on Aug 30.

The government is trying to replicate the success of incentives it introduced in 2020 to jump-start the local assembly of smartphones. That plan led Taiwanese Apple suppliers Foxconn, Wistron and Pegatron to ramp up in India, helping Apple to produce about 7 per cent of its global iPhone output from the South Asian country in its last fiscal year.

Modi’s administration expects companies to make an incremental investment of 24.3 billion rupees (S$397 million) and produce an additional output worth 3.35 trillion rupees under the six-year plan.

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“India is emerging as a very trusted supply chain partner and also a value chain partner because it has good capabilities in design,” Vaishnaw told reporters at a briefing in New Delhi.

Companies could begin production under the plan as soon as early next year, he added.

Apple has yet to apply for incentives to locally assemble its MacBook laptops and iPad tablets, government officials said.

All of the applicants might not win the approvals for the financial stimulus. The smartphone incentives have shown that such programmes usually work well with a few companies that can increase production rapidly, and win bigger cash returns.

The IT hardware manufacturing drive also seeks to penalise companies if production lags behind the set thresholds, by deducting as much as 10 per cent from the subsidies.

To push companies to begin local assembly of IT hardware, India announced plans to impose a new licence requirement for tech imports starting Nov 1, spanning everything from laptops and tablets to servers and components for data centres. US tech companies have protested the move. BLOOMBERG