NEW DELHI: American chipmaker Qualcomm has said that India’s production-linked incentive (PLI) scheme and two other similar ones will help global companies move their manufacturing and a part of the supply chain to the country, the world’s second-largest handset market.

“The timing of the PLI scheme is very, very strategic, very smart. India’s already been attracting manufacturing to relocate there. It’s a question of how deep that manufacturing goes,” Jim Cathey, SVP& and president at Qualcomm Global Business told the Economic Times Global Townhall virtual summit.

He said India is an enormous consumption market, with a very large pool of workers, both unskilled and technology savvy. “India will get more of this diversification in manufacturing, but also supply chain management based on its position and its location of where it is geographically,” Cathey added.

Apple’s suppliers Pegatron, Foxconn, Wistron and Samsung were among 22 companies that have committed investments worth Rs11,000 crore while applying for the government’s PLI scheme that seeks to establish India as a smartphone export hub rivalling northeast Asia’s electronics powerhouses. Several companies have also applied to set up component factories.

The Qualcomm executive said that every company will have to restudy their strategies and accordingly rebalance in terms of their supply chain across industries.

“You’re going to see a diversification of the supply chain, it will naturally happen, it will need to happen. All don’t want to focus on one or two. It’ll get distributed. Not just the suppliers, but also the manufacturing,” said Cathey.

He said that currently just five countries – China, Germany, Ireland, Switzerland and the US – account for roughly half of that supply. But sourcing, manufacturing, and distribution will need to be diversified and countries like India, Brazil and Vietnam will play a bigger role going forward, Cathey said.

The challenge, however, will be how fast manufacturing comes to India at a deeper level.

“In the electronic space, there’s not a deep level of manufacturing as it relates to the components. But there’s already a deep level of manufacturing that comes to the assembly in modules and final products,” he said.

Though India has all the right elements to bring the component manufacturing including semiconductor, DRAMS, microprocessors, foundries and even a flat panel manufacturing facility, Cathey said.

“India has a large workforce, low cost energy and ample supplies of water. Those are some of the basic ingredients to bring in those semiconductor industries. But now that the next part has arrived, it takes more time to do that. And it should be part of the mid to long term strategies going forward,” he added.