India IT ministry fears losing out to China, Vietnam in smartphone exports race
India risks losing out to China and Vietnam as it seeks to become a major smartphone export hub and must "act fast" to lure global companies with lower tariffs, the deputy IT minister said in government documents seen by Reuters.
Smartphone manufacturing is a key plank of Prime Minister Narendra Modi's ambitions to boost the economy and create jobs by attracting companies such as Apple, Foxconn and Samsung to India, the world's second-largest mobile market where production grew 16% year-on-year to $44 billion last year.
That success, Modi's government says, is mostly due to financial incentives given to companies to produce more. But lawmakers and lobby groups for Apple and other firms argue India's high tariffs are a deterrent for companies de-risking their supply chains beyond China, and nations such as Vietnam, Thailand and Mexico have raced ahead in phone exports by offering lower tariffs on components.
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A Jan. 3 letter and a confidential presentation drafted by Indian deputy IT Minister Rajeev Chandrasekhar, and sent to the Finance Minister, show the extent of his ministry's concerns about losing out due to the uncompetitive tariffs.
"India has high production cost due to highest tariffs amongst key manufacturing destinations," wrote Chandrasekhar in the documents, which were seen by Reuters.
"The geopolitical realignment is forcing supply chains to shift out of China ... We must act now, or they will shift to Vietnam, Mexico and Thailand."
Chandrasekhar and India's IT ministry did not respond to Reuters requests for comment.
Lower tariffs on components is key to India's ambitions to attract smartphone manufacturers.
"Made in India" phones use many parts made locally, but companies import many high-end parts from China and elsewhere due to supply chain limitations. These parts are then subject to the high tariffs the government has put in place to protect the local manufacturers, raising overall costs.
U.S. Ambassador Eric
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