The news: India’s government is considering additional subsidies for makers of electronic components and reduced tariffs on certain imports to boost its appeal as a manufacturing destination, per Bloomberg.
The big picture: The timing is ideal for India to implement these measures, as President-elect Donald Trump’s tariff threats push retailers to reduce their reliance on China’s manufacturing might.
By making it cheaper to manufacture smartphones and other electronics—and incentivizing microprocessor and lithium-ion cell production—India hopes to establish itself as an important link in the supply chains of companies like Apple and Google.
Such initiatives build on India’s success with its production-linked incentive scheme, which offers financial benefits to companies that manufacture products domestically.
Our take: India is in an ideal position to benefit from companies diversifying away from China.
While setting up shop in India comes with its own set of complications—like a considerable amount of bureaucratic red tape—government efforts to smooth over such challenges will make the country a more attractive manufacturing destination.
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