Prime Minister Narendra Modi and the CEO of Alphabet, Sundar Pichai, on Monday (October 16) discussed the company’s plan to establish an electronics manufacturing ecosystem in India.
An official statement issued by the government said during the online video interaction, PM Modi appreciated Google’s partnership with Hewlett Packard (HP) to manufacture Chromebook laptops in India. Alphabet is the parent company of Google.
What’s the big deal about the manufacture of the Chromebooks?
The production of Chromebooks in India is a major boost to the country’s electronics manufacturing ambitions. It has put Google among the most high-profile names to begin manufacturing in India as companies worldwide look to diversify supply chains in response to geopolitical uncertainties.
The Chromebooks, which are laptops that run on Google’s Chrome operating system, are being built at the Flex facility near Chennai, where HP has been producing a range of laptops and desktops since August 2020. Production began on October 2, and will cater to the demand, mainly from the education sector, for affordable PCs in India.
Chromebooks are among the most popular laptops in educational institutions worldwide, but are yet to find mainstream traction in India, where most laptops run on Microsoft’s Windows operating system.
The manufacture of Chromebooks in India will help Google compete more effectively with Windows computers built by companies such as Dell, Lenovo, and Asus.
Why is local electronics manufacturing important for India?
India seeks to establish itself as a “trusted partner” in global supply chains at a time when companies, especially from the US, are looking to diversify away from China, which has been the hub of such manufacturing for decades.
Indian imports of electronic goods and laptops/ computers have increased in the last few years. China accounts for roughly 70-80% of Indian imports of personal computers and laptops. New Delhi would like to change this situation as soon as possible.
During April-June this year, the import of electronic goods increased to $6.96 billion from $4.73 billion in the year-ago period, with a share of 4-7% in overall imports. The biggest share of imports is in the category of personal computers, including laptops and palmtops, under which imports from China stood at $558.36 million in April-May this year as against $618.26 million in the year-ago period.
As the window for the Centre’s production-linked incentive (PLI) scheme closed in August, more than 40 companies, including Dell, HP, Asus, Acer, and Lenovo, applied to participate in the programme to manufacture laptops, computers and servers in India. Apple chose to not apply.
The government is expected to clear applications of around 30 companies soon, the majority of which will start production from next April, it is understood.
What else is India doing apart from seeking to incentivise manufacturing in the country?
India has also adopted policy changes to discourage imports from China.
In August, the government had attempted to impose a licensing requirement on the import of laptops and computers, but it was forced to delay the implementation of the directive until October 31 after a strong pushback from the industry.
The Centre has now introduced the so-called “import management system”, under which companies will be required to register and disclose data related to their imports, including countries from which they import electronic hardware such as laptops and personal computers, and domestic sales value.
Eventually, the government will also impose a condition on companies to reorient their supplies from “trusted sources”, a move that is squarely aimed at reducing import dependence on China.
While the quota system, as envisaged earlier, has been put on the back burner for now, it will be implemented in a staggered manner by means of a credit formula — the government will create a ratio between domestic production and imports, and depending on the former, will allow the latter.
Soumyarendra BarikSoumyarendra Barik is a Principal Correspondent with The Indian Expres… read more