In recent years, the South Asian country of India is attracting more and more smartphone manufacturers to produce in India. India dreams of replacing China as the world's factory. But India's structural weaknesses, such as poverty, are obstacles to its competition with China.
Recently, there have been one astonishing announcement, either Apple is making the iPhone 15 in India, Google is making the Pixel8 in India, or Samsung is making the Galaxy S24 in India. Even, Elon Musk said that he is considering building an electric car factory in India. In the face of this amazing announcement after another, the Indians were very excited, as if India had won the trophy. India, the South Asian giant, dreams of competing with China in the global value chain.
Indeed, in recent years, India has attracted a lot of big-name players in the electronics industry. Apple is the embodiment of a growing number of multinationals betting on India. Since 2017, Apple has been assembling low-end iPhones in India, and then developing manufacturing capabilities in India with the help of its Taiwanese subcontractors Pegatron and Wistronet, among others. Starting in 2022, Apple shifted its strategy and started producing the latest models in India, first the iPhone 14 and then the iPhone 15. Currently, 12 to 14 percent of iPhones sold worldwide are made in India, and by the end of 2024, a quarter of Apple's smartphones will come from Indian factories.
Made in India. Piyush Goyal, India's minister of industry and commerce, said, "Often, it's the star companies that set the tone. India's Commerce Minister hopes Apple's example will send a "strong signal" to businesses around the world. In the fiscal year ending March 2023, India's smartphone exports doubled to about $11 billion.
Modi has long wanted to make India the new factory of the world. In his first speech on the occasion of Independence Day in 2014, Modi declared, "I want to appeal to the whole world (......Made in India. ”
Modi, a Hindu nationalist, has just come to power when he unveils his flagship initiative: the "Make in India" initiative. The main element of the plan is to increase tariffs to encourage local production.
In 2022, India's import tax averaged 18%, which is higher than Thailand or Vietnam.
In 2020, India introduced "production-linked incentives," an export subsidy worth nearly $22 billion for 14 key industries such as smartphones, medical products, and auto parts production.
However, French expert Elipi said that although India has overtaken China to become the most populous country on the planet, it is still far from replacing its formidable rival - China.
"It's a lot of talk that India can replace China, but if we look at the global value chain, it's not in the same link as China, India is downstream," the experts said. So the substitution effect is just a statement, and it's only on iPhone-like products. ”
South Asian giants – India must overcome a number of challenges before it can truly compete with China. India's infrastructure is still underdeveloped and there are issues with electricity**.
In addition, while India's elite engineers are well-known around the world, India also faces a shortage of qualified labor. There are about 3500 million Indians can neither read nor write, and only a small fraction have a professional education. In addition, Vietnam, Indonesia, Mexico and Thailand, among others, are also competing with New Delhi in an attempt to attract foreign investors who want to stop betting everything on Beijing.
Second, interventionist economic policies.
Prevailing, relevant experts also pointed out that to a large extent, the economic policy of the Indian authorities is still interventionist, for example, in August 2023, ** suddenly announced restrictions on the import of laptops in order to promote local production. The measure caused panic in the industry and was eventually withdrawn. Interventionist policies like this can also demoralize investors.