May 18th 2024.
Recently, the United Nations released its World Economic Situation and Prospects report, which highlighted India's growing appeal as an investment destination for Western companies. The report projects a 6.9% growth in India's GDP, a significant increase from the previous forecast of 6.2%. This growth is largely attributed to the influx of foreign investments in the country.
Hamid Rashid, the chief of the UN's Global Economic Monitoring Branch, stated that India's positive outlook is fueled by various factors such as lower inflation, strong exports, and increased foreign investments. He also added that India has emerged as a preferred investment source or destination for many Western companies.
During the CII annual summit, Finance Minister Nirmala Sitharaman shared that a recent Capgemini report revealed that 65% of top executives from multinational companies planning to shift their supply chains out of China are considering investing in India. This is a testament to India's growing potential as an investment hotspot.
One such example is Apple, the US smartphone giant, which aims to manufacture over 50 million iPhones annually in India within the next two to three years. Its main supplier, Foxconn, has already expanded its manufacturing operations in India and continues to lead the production shift for Apple. In fact, Foxconn recently received approval from the Karnataka government for an additional investment of Rs 13,911 crore in its upcoming facility in Bengaluru Rural District.
The construction of Foxconn's manufacturing facility for iPhones is already underway near Kempegowda International Airport in Bengaluru. The company has set a target to produce one lakh units of iPhones by December 2025, 50 lakh units by December 2026, and one crore by December 2027 from this facility.
Apple CEO Tim Cook has also expressed his company's focus on the Indian market, stating that it is a major priority for them. This sentiment is shared by other American companies, such as Micron Technology, which is setting up a factory in Sanand, Gujarat. According to Arun Venkataraman, US Assistant Secretary for Commerce, Micron's investment in India reflects the rising interest of American companies in the country. He also praised India's PLI schemes, stating that they are a step in the right direction.
Last year, Micron Technology announced its plans to invest $825 million in setting up a new assembly and test facility in Sanand. This investment is a result of PM Modi's visit to Washington, where he met with CEOs of top US companies. Under the Indian government's scheme, Micron will receive 50% fiscal support for the total project cost from the Centre, and incentives representing 20% of the total project cost from Gujarat. The combined investment by Micron and the two government entities is expected to be around $2.75 billion. Additionally, the Tata group has also announced its plans to invest in setting up semiconductor units in India.
Micron's plant in Sanand is expected to transform the region into a high-tech semiconductor hub, making it the first mega project approved under the Central government's $10 billion incentive plan to attract global chipmakers. Finance Minister Sitharaman stated that the government is determined to stimulate the growth of the manufacturing sector and expects it to play a larger role in the economy as part of the Aatmanirbhar Bharat campaign. She also highlighted the success of the PLI scheme, which has significantly reduced India's import dependence for mobile phones from 78% in 2014 to 99% currently. This is a significant achievement in line with the government's Aatmanirbhar Bharat policy.
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