Programme to Incentivise Domestic Manufacturing Fails to Meet Expectations

Indian Prime Minister Narendra Modi's government has decided to let lapse a US$23 billion (S$30.7 billion) programme to incentivise domestic manufacturing, just four years after it launched the effort to woo firms away from China, according to four government officials.

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NEW DELHI -

The scheme will not be expanded beyond the 14 pilot sectors and production deadlines will not be extended despite requests from some participating firms, two of the officials said. Some 750 companies, including Apple supplier Foxconn and Indian conglomerate Reliance Industries, signed up to the Production-Linked Initiative scheme, public records show.

Firms were promised cash payouts if they met individual production targets and deadlines. The hope was to raise the share of manufacturing in the economy to 25 per cent by 2025. Instead, many firms that participated in the programme failed to kick-start production, while others that met manufacturing targets found India slow to pay out subsidies, according to government documents and correspondence seen by Reuters.