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Incentive scheme for mobile phone & component manufacturing a huge success, production of ₹11.50 lakh crore and export of ₹7 lakh crore expected in 5 years

The Production Linked Incentive Scheme will scheme will bring additional investment of around Rs 11,000 crore to the electronics manufacturing sector. This is expected to generate approximately 3 lakh direct employment opportunities in next 5 years.

Union Electronics & IT, Communications minister Ravi Shankar Prasad said today that the Production Linked Incentive Scheme announced by the government of India for Scale Electronics Manufacturing has been a huge success. In a press conference held via video conferencing, the minister informed that a large number of applications have been received from both global as well as domestic mobile phone manufacturing companies and electronic components manufacturers willing to set up facilities in India taking the benefits of the scheme.

“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. 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,” Ravi Shankar Prasad said.

Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing was notified by the ministry on 1st April, 2020. This scheme extends an incentive of 4% to 6% 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 was open for filing applications till 31st July 2020. Incentives are applicable under the scheme from 1st August this year.

On 2nd June, detailed guidelines for the three initiatives under the scheme were announced by the minister, which included a total incentive of Rs 50,000 crore. The scheme has a goal of increasing production to $106 billion from $70 billion in 2018-19. The target for exports of electronic components is $77 billion. The Production linked Incentive scheme is the largest scheme with value of Rs 40,000 crore, and it is expected to help large scale manufacturing of mobile and other gadgets.

A total of 22 companies have filed their applications under the PLI Scheme. International mobile phone manufacturing companies that have applied under the Mobile Phone Segment are Samsung, Foxcon Hon Hai, Rising Star, Wistron and Pegatron. Out of these, Foxcon Hon Hai, Wistron and Pegatron are contract manufacturers for Apple iPhones. Apple (37%) and Samsung (22%) together account for nearly 60% of global sales revenue of mobile phones and this scheme is expected to increase their manufacturing base manifold in the country.

In the Mobile Phone’s domestic company segment, including Lava, Dixon Technologies, Bhagwati (Micromax), Padget Electronics, Sojo Manufacturing Services and Optiemus Electronics have submitted applications under the scheme. These companies are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production.

Apart from phone makers, 10 companies have filed applications under the Specified Electronic Components Segment, which include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, Vitesco and Neolync.

This Scheme is expected to lead to total production of about Rs 11.5 lakh crore in the next 5 years. Out of this, international mobile phone manufacturers have proposed a production of over Rs 9 lakh crore, domestic mobile phone companies are expected to contribute Rs 2 lakh crore and the companies under Specified Electronic Components segment have proposed production of over Rs 45,000 crore.

This scheme will lead to a significant increase in export of mobile phones and electronics components from India. Over the next 5 years, around 60% of the total production of Rs 11.5 lakh is expected to be exported, which will be around Rs 7 lakh crore.

The Production Linked Incentive Scheme will scheme will bring additional investment of around Rs 11,000 crore to the electronics manufacturing sector. This is expected to generate approximately 3 lakh direct employment opportunities in next 5 years. In addition to that, additional indirect employment of nearly 3 times the direct employment is also estimated. Domestic Value Addition is expected to grow from the current 15-20% to 35-40% in case of Mobile Phones and 45-50% for electronic components.

With the demand for electronics in India expected to grow manifold by 2025, the Minister expressed confidence that PLI scheme and other initiatives to promote electronics manufacturing will help in making India a competitive destination for electronics manufacturing and give boost to Atma Nirbhar Bharat campaign. Creation of domestic champion companies in electronics manufacturing under the Scheme will give fillip to vocal for local while aiming for global scale.

Under the leadership Prime Minister Shri Narendra Modi and his visionary initiatives like the “Digital India” and “Make in India” programmes, India has witnessed an unprecedented growth in electronics manufacturing in the last five years. The National Policy on Electronics 2019 envisions positioning India as a global hub for Electronics System Design and Manufacturing (ESDM) by focusing on size and scale, promoting exports and enhancing domestic value addition by creating an enabling environment for the industry to compete globally.

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