India is eroding China’s dominance of electronics exports to some key markets as manufacturers diversify supply chains away from the world’s factories to other parts of Asia, a new study shows.
Its impact is most pronounced in Britain and the US, where geopolitical tensions with China have increased in recent years.
According to London-based Fathom Financial Consulting, India’s electronics exports to the US as a proportion of China increased to 7.65% in November last year from 2.51% in November 2021. In the UK, the share increased from 4.79% to 10%.
The Indian government is wooing electronics manufacturers in the country with huge incentives like tax cuts, rebates, easy land acquisition and capital support. It aims to expand the domestic manufacturing industry to export more and help businesses grow to a global level through partnerships.
Samsung Electronics Co. has the largest mobile phone factory in India, while Apple Inc. makes at least 7% of all its iPhones in India through its contract manufacturers Foxconn Technology Group and Pegatron Corp.
The increase in electronics exports is “likely the result of Foxconn’s increased investments in India,” Andrew Harris, an economist at Fathom Financial Consulting, wrote in a note last week.
India’s progress in gaining market share has been more limited in Europe and Japan,” at least for now, suggesting moving towards a dual supply chain (China plus one) rather than abandoning China-based production altogether. Is gone,” Harris said. The report shows that India’s electronics exports as a proportion to China were 3.38% to Germany and 3.52% globally.
Indian companies are playing their role in the ‘China Plus One’ strategy of multinational companies, under which manufacturers are developing back-up capacity in other countries.
India’s growing market share is a boost for Prime Minister Narendra Modi, who has touted his ‘Make in India’ plan as a way to make the economy more self-reliant by creating jobs, increasing exports and reducing the need for imports. He is widely expected to win a third term in office in elections to be held within a few months.