India to lure manufacturers with electronics repair pilot project
30/05/2023 11:13
By Munsif Vengattil
NEW DELHI, May 30 (Reuters) - India will start a pilot
project this week to establish itself as an electronics repair
hub by relaxing cumbersome import-export rules, a move that
could draw tech majors such as Flex FLEX.O to expand such
operations in the country.
Prime Minister Narendra Modi has promoted electronics
manufacturing in India and attracted the likes of Apple AAPL.O
and Xiaomi 1810.HK , but the country still lacks an industry
for repair outsourcing which is estimated to be worth $100
billion globally and currently dominated by China and Malaysia.
Following a push by an industry group for IT and electronics
manufacturers, MAIT, the Indian government will test changes to
lower the time required for necessary approvals for imports and
exports to a day from as much as 10 days.
MAIT Director General Ali Akhtar Jafri said the government
has agreed to ease the approval process for timely clearances
with the tax authorities so that devices can easily enter India
for repairs and then be shipped back quickly.
Bottlenecks in India also include an e-waste mandate that
bans companies from locally disposing non-repairable products -
adding to their logistics costs as they have to be sent back.
The government will now allow recycling of 5% of imported goods
domestically on a trial basis.
In the pilot phase, which will see participation from
companies including Lenovo 0992.HK and Cisco CSCO.O , India
will also permit re-export of the imported electronics goods to
countries different from the original one - currently it is
banned under foreign trade rules.
Flex, Lenovo and Cisco did not immediately respond to
Reuters' requests for comment. India's IT ministry also did not
immediately respond.
"Repair outsourcing will incentivise electronic
manufacturers to further expand their production capabilities in
India. This is a critical step towards ensuring resilience to
supply chain shocks," said Jafri, who estimated the repair
industry in India to be worth $20 billion in five years.
High repair costs in regions such as Europe and the United
States are compelling companies to send goods overseas, Jafri
said. He added that cheaper labour costs in India give it a
total cost advantage of 57% over China and 26% over Malaysia -
some of the biggest hubs for repairs at present.
(Reporting by Munsif Vengattil in New Delhi; Editing by
Jacqueline Wong)
((munsif.vengattil@thomsonreuters.com;))