Ministry of Electronics and Information and Technology has approved proposals by 16 phone makers under the Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing. The PLI scheme was notified on 1st April announcing incentives 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).
According to a press release issued by the ministry on Tuesday, the scheme will lead to a total production of more than Rs 10.5 lakh crores over the next five years. Out of this, companies approved under Mobile Phone (Invoice Value Rs 15,000 and above) segment have proposed a production of over Rs 9,00,000 crore. The approved companies under Mobile Phone (Domestic Companies) segment have proposed production of about Rs 1,25,000 crore and the companies under Specified Electronic Components segment have proposed a production of over Rs 15,000 crore.
The companies approved under Mobile Phone (Invoice Value Rs 15,000 and above) are Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron. Out of these, Foxconn 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.
Under Mobile Phone (Domestic Companies) Segment, Indian companies including Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics have been approved by the ministry. These companies are expected to expand their manufacturing operations in a significant manner in India and grow into national champion companies in mobile phone production.
Under the Specified Electronic Components segment, six companies have been approved, AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, and Neolync. The companies under this category manufacture network equipment needed to run mobile telephone networks. Ten companies had applied under this category, and applications of six have been approved so far.
The scheme expected to increase export of mobile phones from India significantly. Out of the Rs 10,50,000 crore in the next 5 years, around 60% (Rs 6,50,000 crore) of them will be exported. The companies approved under the scheme will bring additional investment of around Rs 11,000 crore.
The companies approved under the scheme will generate more than 2 lakh direct employment opportunities in next 5 years along with the creation of additional indirect employment of nearly 3 times the direct employment. 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.
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.