India's new government faces a significant challenge in boosting the manufacturing sector, which currently contributes less than 15% to the country's GDP, as reported by the World Bank. The growth of factories is crucial for India's aspirations to emerge as a global economic powerhouse.
During its previous term, the Modi administration made strides in this direction by leveraging the ongoing shift in supply chain strategies among companies. Many international firms are seeking to diversify their operations away from China due to pandemic-related disruptions and escalating tensions between Beijing and Washington.
To attract companies to establish manufacturing facilities in India, the country has introduced a production-linked incentive program valued at $26 billion. This initiative covers 14 sectors, including electronics, automobiles, pharmaceuticals, and medical devices.
As a result of these efforts, major corporations like Apple supplier Foxconn are significantly expanding their presence in India. Notably, Apple began manufacturing its latest iPhone 14 models in India shortly after their global launch in September 2022, a departure from its previous timeline of several months.
Industry analysts view this shift as a significant achievement for Prime Minister Narendra Modi, as closer manufacturing ties with a tech giant like Apple are expected to attract other global players to India's electronics manufacturing ecosystem. Canalys projects that by the end of 2025, up to 23% of iPhones will be produced in India, a substantial increase from the 6% recorded in 2022.
