India has a massive plan to boost manufacturing — and technology firms in Greater China will be a key beneficiary, according to Goldman Sachs. The investment bank called the plan, known by its Production-Linked Incentive Schemes, as a “substantial opportunity” for Greater China tech firms. The initiative incentivizes foreign companies to start manufacturing in India and encourages local firms to expand their production and exports there. Goldman said tech represents more than half of the opportunity. Goldman noted in a March report that there are six such incentive initiatives with a total budget of more than $17 billion for the tech sector, in areas such as smartphones, PCs, servers, electronic components, semiconductors and telecommunications equipment. Under the IT hardware initiative, for instance, Greater China tech firms represent 76% of potential capital expenditure contribution. And under the large-scale electronics manufacturing initiative, such firms would represent 56%. The investment bank estimates that if India follows a growth trajectory similar to China’s, its mobile phone export volume will grow by six times between 2021 and 2025. “After trade tensions, the US chip export restrictions and Covid disruptions, the global supply chain again saw a trend of decentralized and localized production to increase supply chain security. As a leading end market with a large labour force, India became one of the key beneficiaries of the trend in 2022,” Goldman analysts wrote. The bank expects that foreign companies will be more active in India, with Apple planning to move 25% of global iPhone production to the country within two years. On top of that, Hon Hai could build a new factory in India this year, the bank said. Stock picks Goldman named two buy-rated stocks that it said stand to benefit from India’s big manufacturing plans. They are Taiwanese giant Hon Hai Precision Industry — the world’s largest contract electronics maker and assembler of around 70% of iPhones — and China’s Luxshare , also an Apple supplier. “[That’s] given their balance sheet capacity to expand and longer experience in managing a scaled labor force, complex supply chains and logistics,” Goldman wrote. It predicts margins and returns for the companies will be initially lower, but expects they will be profitable within four years as capacity increases and supply chains are established. Government subsidies will also help, said the bank. Hon Hai’s smartphone assembly capacity expansion represents a $850 million investment opportunity in India, while Luxshare’s smartphone assembly business there represents $92 million, according to Goldman. The bank gave Luxshare a price target of 47 Chinese yuan ($6.80), implying upside of around 58%. Hon Hai got a price target of 135 Taiwanese dollars ($4.40), or upside of around 31%.