India is set to launch a pilot project aimed at positioning itself as a leading electronics repair hub by streamlining import-export regulations. This strategic move has the potential to entice major tech companies like Flex to expand their operations in the country.
Prime Minister Narendra Modi has been actively promoting electronics manufacturing in India, successfully attracting industry giants such as Apple and Xiaomi. However, India still lacks a robust repair outsourcing industry, which is estimated to be a $100 billion market globally, currently dominated by China and Malaysia.
In response to the advocacy of MAIT, an industry group representing IT and electronics manufacturers, the Indian government will initiate regulatory changes to expedite approvals for imports and exports. The aim is to reduce the approval process from up to 10 days to just a single day.
Ali Akhtar Jafri, Director General of MAIT, shared that the government has agreed to facilitate a smoother approval process by collaborating with tax authorities. This collaboration will ensure timely clearances, enabling devices to enter India for repairs and facilitating their swift return.
The existing challenges in India’s repair industry also include an e-waste mandate that prohibits companies from locally disposing non-repairable products, resulting in increased logistics costs as these items have to be sent back. To address this issue, the government plans to allow the domestic recycling of 5% of imported goods on a trial basis.
During the pilot phase, renowned companies such as Lenovo and Cisco will participate, and India will also permit the re-export of imported electronic goods to countries other than their original destination, which is currently prohibited under foreign trade rules.
Jafri highlighted the significance of repair outsourcing, stating that it will incentivize electronic manufacturers to expand their production capabilities in India. This strategic move is crucial in building resilience to potential disruptions in the global supply chain. Jafri estimates that India’s repair industry will be valued at $20 billion within five years.
Escalating repair costs in regions like Europe and the United States are compelling companies to seek repair services abroad. Jafri further explained that India’s lower labor costs provide a competitive advantage, with a total cost advantage of 57% over China and 26% over Malaysia, two major repair hubs at present.