India, to attract the companies to set up manufacturing in the south Asian nation, plans to offer incentives worth 1.68 trillion rupees ($23 billion), as stated by officials in GOI.

According to documents reviewed by Bloomberg News, PM Narendra Modi’s government will offer production-linked incentives to automobile manufacturers, solar panel makers, and specialty steel to consumer appliance companies. Textile units, food processing plants and specialized pharma product makers are also being considered under the plan.
The country’s policy planning body will lead the incentive program, which uses the template of a scheme implemented earlier this year to draw businesses away from China.

As per the Indian government, after India offered to pay an amount equivalent to 4%-6% of incremental sales over the next five years, about two dozen companies including Samsung Electronics Co., Hon Hai Precision Industry Co., known as Foxconn and Wistron Corp. pledged $1.5 billion of investments to set up mobile-phone factories in the country.

To strengthen an economy that posted its worst slump among major economies last quarter when it contracted 23.9%, New Delhi has been working on attracting investments. Corporate taxes are already among the lowest in Asia, while bankruptcy rules were realigned to improve the ease of doing business. But those have done little to make it the first choice for businesses looking to diversify and move their supply chains away from China.

According to a recent survey by Standard Chartered Plc, Vietnam continues to be the most desirable destination, followed by Cambodia, Myanmar, Bangladesh and Thailand.The government also plans to introduce a phased manufacturing program to other sectors for allowing companies to progressively enhance local value-addition. The program, presently in prevalence for components and accessories used for mobile phones, is proposed to be extended for furniture, plastics, toys and low-value consumer durables. Most of these items are currently being imported from China.

Officials said that the details of both the programs are being worked out and would be put up for the approval of the federal Cabinet soon.