Two of the world's biggest PC makers plan to step up manufacturing in India this year as the country weighs tightening import restrictions to boost the local tech industry.
Taiwan's Acer and Asustek both told Nikkei Asia that they see local production in India as a long-term trend.
Acer Chairman Jason Chen said India has become the company's second-largest market by shipments and revenue after the U.S. and it plans to accelerate sales of consumer notebook computers there this year.
Acer is in talks with its Indian manufacturing supplier, as well as its other Taiwanese suppliers, to increase local production in the country, as that is the direction of the Indian government's policy down the road, the chairman said.
"Our collaboration with the Indian supplier that began in 2023 works very well and now they want more models and more volume," Chen told Nikkei Asia on the sidelines of a recent industry event in Taipei. "The Indian market grows so fast that its potential can't be neglected."
Asustek Computer Co-CEO Samson Hu, at the same event, told Nikkei Asia that the company is working "aggressively" with its suppliers to respond to the Indian government's push for more local manufacturing in the long term.
"Currently, our suppliers mainly do final assembly in India, but we are actively thinking of requesting more component-level production in the country as the next stage of our strategy," Hu said.
Hu said Asustek has been building up its consumer notebook brand in India over the past two years and starting this year the country will be one of Asustek's priority markets for expanding its commercial notebook business.
A third company, contract notebook manufacturer Wistron, said it has secured a plot of land in Karnataka, India, to build a maintenance and after-sales service center for its notebook business. The company recently sold its iPhone assembly plant in the country to local conglomerate Tata.
"We already have a rented facility for the service for a long time, but the business is very big and growing. That's why we are buying a plot of land to build one on ourselves," Wistron Chairman Simon Lin told reporters ahead of the company's year-end party for employees. "We do not rule out the option to later turn this facility into manufacturing lines for making PCs."
The three companies' plans for India come amid dramatic policy shifts in the country.
Last August, the government introduced rules that would have required licenses for the import of several tech products, including notebooks, tablets, all-in-one PCs and servers, with immediate effect. The move was widely seen as an attempt to support the country's "Make In India" initiative. However, the sudden announcement sent shockwaves through the tech industry, leading the government to introduce a compromise. Instead of requiring licenses for imports, the government instead began requiring companies to use a new import management system from last November. Licensing requirements could still be introduced down the road, however.
India's push to build up its tech supply chain comes as China's position as the world's manufacturing powerhouse is declining amid a trade war with the U.S. Southeast Asian countries, such as Vietnam and Thailand, have already benefited from the supply chain diversification for consumer electronics like smart watches, smart speakers and servers, while Malaysia is seeing a resurgence as a hub for chip packaging and testing.
Last year's import policies were not India's first attempt to boost local tech production. Three years ago, it introduced a production-linked incentive (PLI) program to encourage smartphone makers like Apple and Samsung to build locally by offering rewards for increased output. The iPhone maker is urging its suppliers to increase component-level manufacturing in India, Nikkei Asia reported earlier.
In May last year, it introduced PLI 2.0, which broadens the scope to more information technology products, such as notebooks and tablets. A total of 27 out of the 40 applicants, including HP, Dell, Lenovo, Acer and Asustek, were approved under the program.
Prachir Singh, senior analyst at Counterpoint Research, said import duties for these IT products used to be close to zero, except for the government bid projects that require local manufacturing. Now, however, the Indian government wants not only mobile phones but also more IT products to be made in India, the analyst said.
"There's a difference between this policy [PLI 2.0] and the one we had on mobile, which was very popular in 2020 and 2021," Singh said. "There is additional incentive and there is also a mandate that you need to add at least a component every year, otherwise, your incentive will get canceled."
"This policy not just focuses on localization of manufacturing but also on components as well. I believe it will have a positive impact ... as you can see a similar boost happened with the mobile phone PLI scheme," Singh said.
Counterpoint forecast the PC shipments in the Indian market to grow by 9.3% on the year in 2024, outpacing the projected global PC shipment increase of 5%.
