Modi's visit to US marks more technological investments in India

As Indian prime minister Narendra Modi commenced his visit to the US, Google is reportedly discussing moving part of its Pixel smartphone production to India as a slew of US-based manufacturers are looking to invest in the South Asian country to help the US reduce its reliance on China.

Bloomberg quoted sources saying that Google had begun discussing with contract manufacturers approved under India's Production Linked Incentive (PLI) scheme for large-scale electronics manufacturing to make Pixel phones in India.

Currently, Pixel smartphones are made by Compal in Vietnam, and India imposed more than 20% tariffs on these imported phones. Partly due to the higher cost for consumers, of 8 million Pixel phones shipped worldwide in 2022, less than 150,000 Pixel phones were shipped in India. If Google begins manufacturing Pixel phones in India, it may help Google to gain market share and boost India's mobile phone exports.

According to the India Cellular and Electronics Association, in the first two months of fiscal 2023 (April 2023 to March 2024), smartphones worth INR200 billion (US$2.4 billion) were exported, up from INR90.66 billion from a year earlier. iPhones accounted for 80% of those exports. ICEA expects mobile phone exports from India in fiscal 2024 will reach INR1.2 trillion.

The rumored development about Google's intention to make Pixel phones in India comes when Modi is making a five-day visit to the US, where he is expected to meet technology leaders, including Apple CEO Tim Cook, Google CEO Sundar Pichai, and Microsoft CEO Satya Nadella.

Modi's visit marks the deepening of the bilateral relationship between the US and India in their technological and manufacturing ties to reduce their reliance on China. Reuters quoted sources saying that India's cabinet had approved Micron's proposal to set up a US$2.7 billion ATMP plant in Sanand, Gujarat.

Furthermore, Reuters quoted Musk saying that he had a very good conversation with Modi and that the maker of EVs will try to be in India "as soon as humanly possible." It is to be noted that Tesla and the Indian government have disagreed about the import duties on EVs, which led to a postponed decision by the EV maker to sell cars in the market, which witnessed surging EV sales in recent years.

Bloomberg Intelligence analysts said in a research note that India has the potential to join global supply chains in a big way, with manufacturing in India undergoing a profound shift thanks to the PLI schemes, a growing workforce, infrastructure development, and geopolitical changes.

Source: DPIIT, June 2023