In a strategic move to capitalize on India’s burgeoning market and leverage the production-linked incentive (PLI) scheme for IT hardware, global technology giant Lenovo is set to ramp up its local manufacturing operations in the country. Recognizing India as its top-priority market globally, the Chinese company aims to harness the growth potential facilitated by enhanced connectivity and the opportunity to proliferate its devices in a rapidly evolving digital landscape.
Matthew Zielinski, President of International Markets at Lenovo, emphasized the significance of India in the company’s global strategy, citing not only the substantial growth potential driven by connectivity but also the abundance of highly skilled talent in the country. With 1,700 employees and three manufacturing sites in India, Lenovo has been on a trajectory of doubling its job creation, establishing the nation as a pivotal hub for its international operations.
Lenovo’s acquisition of Motorola in 2014 further solidified its presence in the Indian market, with the company locally manufacturing desktops, personal computers, and all Motorola smartphones sold in the country. In a strategic move last year, Lenovo commenced exports of mobile phones to North American markets, showcasing its commitment to expanding its global footprint from its Indian manufacturing base.
The recent launch of personal computers with locally manufactured motherboards aligns with the Indian government’s preferential market access policy, making Lenovo eligible for government contracts for personal computers. Zielinski affirmed the company’s commitment to expanding its manufacturing capacity, not only for personal computers but also exploring the production of servers locally, envisioning it as the next frontier of the PLI scheme.
Vlad Rozanovich, President of Infrastructure Solution Group at Lenovo, highlighted the impact of US regulatory changes restricting semiconductor exports to China, positioning India as a critical consideration for companies like Lenovo. In response to these changes, the company is exploring ways to enhance its manufacturing capabilities in India, particularly in data center products such as high-end GPU-related products.
Rozanovich emphasized the importance of India as a strategic manufacturing partner, considering Lenovo’s ambitious plans for its $10-billion data center business. The company aims to double the growth of this business over the next five years, making India a crucial player in achieving this objective. By deepening its manufacturing capabilities in India, Lenovo seeks to benefit from economic advantages, streamlined logistics, and sustainability, allowing the production of products in close proximity to its customers.
As India’s second-largest PC manufacturer, Lenovo plans to collaborate with additional ecosystem players to elevate the level of local manufacturing. The company’s focus on smartphones involves doubling the local value over the next two years, aligning with its broader strategy of strengthening its position in the Indian market.
Lenovo’s participation in the revamped PLI scheme for IT hardware underscores its commitment to local manufacturing. The company announced its collaboration with Padget Electronics, a wholly-owned subsidiary of Dixon Technologies, to manufacture laptops and notebooks locally, responding to the Indian government’s graded check on imports of various IT hardware products.
The IT hardware PLI scheme, offering incentives amounting to ₹17,000 crore over the next six years, incentivizes companies to shift from imports to local manufacturing and eventually exports. An additional 3% optional incentive is provided to companies utilizing India-made and designed components, sub-systems, or inputs, further encouraging a shift towards self-sufficiency in the manufacturing sector.
In conclusion, Lenovo’s strategic focus on expanding local manufacturing in India reflects its commitment to harnessing the nation’s growth potential and leveraging government incentives. The company’s multifaceted approach, encompassing personal computers, smartphones, and potential server manufacturing, positions India as a key player in Lenovo’s global manufacturing ecosystem.
