The Tata Group is planning to invest about Rs11,000 crore in setting up a mobile phone and component manufacturing plant. Sources state that the plant will be set up in Tamil Nadu. This will help take advantage of the government's Production Linked Incentive scheme which aims at attracting investments for India, which would otherwise have gone to China.
Tata Electronics has been allotted 500 acres by Tamil Nadu Industrial Development Corporation (TIDCO) in order to set up the plant. As the project is of such a huge scale, TEAL's (Titan Engineering and Automation Ltd) advice has been sought after to provide the expertise for this project. The new unit will have a staff strength of 18,000 by October 2021 and 90% of it will be women.
What is the PLI (Production Linked Incentive) scheme?
In efforts to reduce India’s dependence on China, the Indian government announced a scheme which aims to give companies incentives on incremental sales from products manufactured in domestic units. Sectors like mobile and allied equipment, pharmaceutical ingredients and medical devices manufacturing are labor-intensive and are thus expected to cater to the growing employment demands of the country.
This scheme has got a good response from global players such as Wistron, Pegatron, Foxconn, Hon Hai, and Samsung to name a few.
How will this move benefit the Tata group?
The partnership with Apple will be part of PM Narendra Modi’s “Make in India” push.
In 2019 alone 300 million phones were assembled in India, making it the biggest mobile phone manufacturer in the world after China. Keeping the statistics in mind, it is anticipated that Tata's move will help India consolidate its position as an original equipment manufacturer (OEM). With companies like Apple looking to have another unit outside China, the total number of mobile phone manufacturing and assembling plants have increased from just 2 in 2014 to about a 100 in 2019.
Tata Group plans to benefit from this opportunity and is attempting to woo companies like Apple to have their alternative production sites in India as they seek to diversify out of China. Besides catering to Apple's sourcing needs, Tata's also making efforts to meet other global OEMs' requirements. This in turn will promote India as an alternative to China in becoming a global manufacturing hub for electronics manufacturing.