The government has released the names of 16 applicants who have been found eligible for the product linked incentive scheme for large scale electronics manufacturing launched in April this year, including Samsung, Lava, Micromax, Dixon and contract manufacturers for Apple iPhone – Foxconn, Wistron and Pegatron.
None of the Chinese smartphone makers like Xiaomi, Vivo, Oppo, OnePlus or Realme figure in the list even though together they command over 70 per cent of the smartphone market in India.
The international mobile phone manufacturing companies that have been approved under mobile phone (Invoice Value Rs 15,000 and above) segment are Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron. Out of these, three companies, namely Foxconn Hon Hai, Wistron and Pegatron are contract manufacturers for Apple iPhones. Apple (37 per cent) and Samsung (22 per cent) together account for nearly 60 per cent of global sales revenue of mobile phones and this scheme is expected to increase their manufacturing base manifold in the country.
Under mobile phone (Domestic Companies) segment, Indian companies including Lava, Bhagwati (Micromax), Padget Electronics (Dixon), UTL Neolyncs and Optiemus Electronics have been approved. These companies are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production.
Six other companies approved under the specified electronic components segment include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, and Neolync.
“PLI scheme has been huge success in terms of the applications received from Global as well as Domestic mobile phone manufacturing companies and electronic components manufacturers. Industry has reposed its faith in India’s stellar progress as a world class manufacturing destination and this resonates strongly with Prime Minister’s clarion call of AtmaNirbhar Bharat – a self-reliant India,” said Ravi Shankar Prasad, Union Minister for Electronics and IT, Communications, Law and Justice. “We are optimistic and looking forward to building a strong ecosystem across the value chain and integrating with the global value chains, thereby strengthening electronics manufacturing ecosystem in the country.”
The Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing was notified on April 1, 2020 and extends an incentive of 4 to 6 per cent on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20).
The scheme deliberately favours local brands. For international companies, a threshold value of Rs 15,000 has been stipulated which is absent for local firms. The investment criteria for local companies is also lower compared to their global peers. Domestic firms need to invest just Rs 50 crore initially and Rs 200 crore incrementally over four years to avail the incentives of the scheme while for others it is Rs 250 crore initially and Rs 1,000 crore over four years.
Over the next 5 years, the approved companies under the PLI Scheme are expected to lead to total production of more than Rs 10.5 lakh crore. Out of the total production, the approved companies under Mobile Phone (Invoice Value Rs 15,000 and above) segment have proposed a production of over Rs 9 lakh crore, the approved companies under Mobile Phone (Domestic Companies) segment have proposed a production of about Rs 1.25 lakh crore and those under Specified Electronic Components segment have proposed a production of over Rs 15,000 crore.
The companies approved under the scheme are expected to promote exports significantly. Out of the total production of Rs 10.5 lakh crore in the next 5 years, around 60 per cent will be contributed by exports of the order of Rs 6.5 lakh crore. The companies approved under the scheme will bring additional investment in electronics manufacturing to the tune of Rs 11,000 crore.
The companies approved under the scheme will generate more than two lakh direct employment opportunities in next 5 years along with creation of additional indirect employment of nearly 3 times the direct employment.
Domestic value addition is expected to grow from the current 15-20 per cent to 35-40 per cent in case of mobile phones and 45-50 per cent for electronic components.