Government planning incentives worth $23 billion to boost manufacturing
India is planning to offer incentives worth 1.68 trillion rupees ($23 billion) to attract companies to set up manufacturing in the South Asian nation, people with knowledge of the matter said.
Prime Minister Narendra Modi’s government will offer production-linked incentives to automobile manufacturers, solar panel makers, and specialty steel to consumer appliance companies, according to documents reviewed by Bloomberg News. Textile units, food processing plants and specialized pharmaceutical product makers are also being considered for the plan.
The incentive program, being spearheaded by the country's policy planning body, uses the template of a scheme implemented earlier this year to draw businesses away from China. About two dozen companies including Samsung Electronics Co., Hon Hai Precision Industry Co., known as Foxconn and Wistron Corp. pledged $1.5 billion of investments to set up mobile-phone factories in the country, according to the government, after authorities offered to pay them an amount equivalent to 4%-6% of their incremental sales over the next five years.
New Delhi has been working on attracting investments to revive an economy that posted its worst slump among major economies last quarter, when it contracted 23.9%. Corporate taxes are already among the lowest in Asia, while insolvency rules were overhauled to improve the ease of doing business. But those have done little to make it the first choice for businesses looking to diversify supply chains away from China.