India’s $23bn plan to rival China factories to lapse after it disappoints

#Indias #23bn #plan #rival #China #factories #lapse #disappoints

New Delhi: According to four government officials, the government of Indian Prime Minister Narendra Modi has decided to end a $ 23 billion program to encourage domestic manufacturing, according to four government officials, according to four government officials, according to four government officials, only four years later.

The two officials said the scheme would not be extended to 14 pilot sectors and despite the requests of some partner firms, the deadline for production would not be extended.

Public records indicate that approximately 750 companies, including Apple supplier Foxkin and Indian collective Reliance Industries, sign the Initiative Scheme -linked Initiative Scheme.

If they meet individual production goals and deadline, the firms were promised cash. It was hoped that by 2025 the manufacturing share in the economy would increase by 25 %.

Instead, many firms who participated in the program failed to start production, while others who met the goals of manufacturing, according to official documents and correspondence by Reuters, showed a slowdown in paying subsidy to India.

According to an extraordinary analysis of the program compiled by the Ministry of Commerce, by October 2024, the participating firms developed $ 151.93 billion worth of goods under the program, or 37 % of the target, which was set by Delhi, according to an unopposed analysis of the program set by the Ministry of Commerce. The document states that India had released only 73 1.73 billion in concessions – or less than 8.0 % in allocated funds.

For the first time, Reuters reports reports of Reuters decision not to extend details of government plans and payments.

Modi’s office and the Ministry of Commerce, which oversees the program, did not respond to the requests for comment. Since the introduction of the project, the share of the economy has been reduced by 15.4 % to 14.3 %.

Foxkin, who now hires thousands of contract workers in India, and Reliance has not returned requests.

Two government officials told Reuters that the end of the program did not mean that Delhi had abandoned its manufacturing ambitions and alternatives were being planned.

Last year, the government defended the impact of the program, especially in pharmaceutical and mobile phone manufacturing, which saw explosive growth. Of the concessions given between April and October 2024, about 94 % of the $ 620 million were directed to these two sectors.

According to the analysis, in some instances, some food sector companies who applied for subsidies were not released because of factors such as “non -compliance of investment threshold” and companies “no minimum growth”. Details were not provided in the document, though it found that production goals in this sector had exceeded. Reuters could not determine which companies the analysis cited.

But Delhi had earlier acknowledged the issues and agreed to extend some deadline and increase payment frequency after complaints from PLI participants. An Indian official, who spoke on condition of anonymity to discuss secret issues, said excessive red tape and bureaucratic precautions continued to strengthen the effect of the scheme.

As an alternative, India is considering supporting some sectors by partially compensating the investment for the establishment of plants, which can lead to more expenses to firms than waiting for production and sale.

In the Delhi Council for Social Development Think Tank, commercial expert Basjit Dhar, who has said that Modi’s government needs to do more work to attract foreign investment, he said that this country may have lost its moment.

“The concession program was” the last chance that we had to restore our manufacturing sector, “he said. “If such a mega scheme fails, do you expect anything to succeed?”

Manufacturing was a deadline when India tries to stop the ongoing trade war by US President Donald Trump, which has criticized Delhi’s protectionist policies.

Dhar said, the threat of mutual prices on countries like India, which holds trade surplus with the United States, means that the export sector is being challenged rapidly. “There was a small amount of tariff protection … and it’s all about to end.”

Hits and misses

The program was introduced at a suitable time for India: China, which has been the world’s factory floor for decades, was struggling to maintain production during Beijing’s zero covid policy.

The United States was also rapidly trying to reduce its economic dependence on Beijing, indicating that many multinationals were indicated to implementing a “one” policy “other than China.”

Its youth population, low cost and a government are considered relatively friendly to the West, it seems that India will benefit.

In recent years, India has become a global leader in the manufacture of pharmaceutical and mobile phones.

Official data shows that in 2023-24 fiscal year, the country manufactured $ 49 billion worth of mobiles, which is more than 2020-21. After industry leaders like Apple start with low -cost models, now produce their modern and very sophisticated cell phones in India.

Similarly, pharmaceutical exports in 2023-24 a decade ago increased to about $ 27.85 billion.

But success was not repeated in other fields, including steel, textile and solar panel manufacturing. India faces fierce competition from cheap rivals like China in many of these fields.

For example, in the solar industry, eight of the 12 companies who signed the PLI are unlikely to meet their goals, according to the 2024 sector analysis, produced by the Ministry of Renewable Energy and Reuters. The eight firms included Reliance, Adani Group and JSW units of the Indian party.

The analysis has shown that the Reliance entity will meet only 50 % production target, which was fixed at the end of 2027 fiscal year, when the solar PLI scheme expires. It also states that the Advani business did not order the goods needed to produce a solar panel and JSW has yet “done nothing”.

JSW refused to comment, while Adani did not answer questions.

The Ministry of Commerce said in a letter to Reuters in January that it would not agree with its counterpart request to extend the scheme beyond 2027 as doing so would “have an unfair benefit for non -performance”.

The Ministry of Renewable sources said in response to Reuters’ questions that it “along with” justice and accountability “also ensures that only those who meet their goals”.

In the steel sector, investment and production also remain in the goals. According to a broader analysis, fourteen of the 58 approved PLIS projects have been withdrawn or removed due to lack of growth.