Lenovo outsources notebook manufacturing to Dixon in India

Dixon Technologies, one of the largest EMS providers in India, bagged Lenovo's order to make notebooks as the South Asian country hopes an incentive policy to encourage locally-made notebooks can help reduce its reliance on imports from China.

According to a corporate filing to the stock exchanges in India, Dixon said Padget Electronics, its wholly-owned subsidiary, has been awarded a manufacturing contract by Lenovo to carry out manufacturing of notebooks under the Production Linked Incentive (PLI) scheme for IT hardware 2.0, subject to the signing of definitive agreement in due course.

Atul B. Lall, vice chairman and managing director at Dixon, said the deal gives the company immense pleasure to partner with the iconic brand Lenovo for manufacturing IT Hardware products under the IT hardware PLI 2.0 Scheme, adding that this will give a strong impetus to India's manufacturing competitiveness as Lenovo will bring in the global know-how and processes to manufacture IT hardware products.

India tried to replicate the success in the smartphone manufacturing industry, adopting a carrot-and-stick approach to develop a local manufacturing ecosystem for IT hardware, such as notebooks and tablets. In mid-November, 27 companies, including global and local firms, such as Dell, HP, Foxconn, Lenovo, Optiemus, Padget, and VVDN, were approved under the PLI for IT hardware 2.0, a revised version of a previous incentive scheme that failed to attract global investors to make notebooks in India.

Padget and its parent, Dixon, have the manufacturing capabilities to produce notebooks and tablets. Still, only Padget was approved under the PLI for IT hardware, which makes sense for Lenovo to sign a deal with Padget rather than Dixon.

Meanwhile, India also leverages an import management system for notebooks, effective in November, requiring notebook importers to apply before exporting their products overseas to India.

According to India's trade data, approximately 80% of notebooks and tablets were sourced through imports from China. Moreover, most components crucial for computers and notebooks were predominantly imported from the country with which India has a strained bilateral relationship.

Source: BIS, December 2023