India's $23 Billion Plan to Compete with China’s Factories Set to Lapse

Indian Prime Minister Narendra Modi's government to allow a $23 billion initiative aimed at encouraging domestic manufacturing to expire, merely four years following its commencement to attract companies away from China, according to four government officials.

The scheme will remain limited to the 14 pilot sectors, and production deadlines will not be prolonged, despite appeals from certain participating companies, according to two officials. Public records indicate that approximately 750 firms, including Foxconn, a supplier for Apple, and the Indian conglomerate Reliance Industries, have enrolled in the Production-Linked Initiative scheme. Companies were assured monetary rewards contingent upon achieving specific production goals and timelines. The objective was to increase the manufacturing sector's contribution to the economic prospects to 25% by the year 2025.

Many companies involved in the program struggled to initiate production, while those that achieved manufacturing goals experienced delays in subsidy payments from India, as indicated by  government documents and communications reviewed by Reuters. By October 2024, the firms participating in the program had generated goods valued at $151.93 billion, which represents only 37% of the target established by Delhi, according to an analysis of the program prepared by the commerce ministry. The report noted that Indian government had disbursed merely $1.73 billion in incentives, amounting to less than 8% of the total funds allocated.