Centre approves 16 firms for PLI scheme; aims Rs 10.5 lakh cr production boost in 5 years

KEY HIGHLIGHTS

• PLI Scheme to provide a major boost to PM Modi's Make in India and AtmaNirbhar Bharat.
• PLI scheme receives good response from global and domestic mobile phone manufactures and electronic parts makers.
• Over the next 5 years, the Centre aims production worth Rs 10.5 lakh crore and exports of Rs 6.5 lakh crore.

A total of 16 eligible applicants, including  Samsung, Foxconn Hon Hai, Rising Star, Wistron, Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Pegatron, have been approved by the Ministry of Electronics and Information and Technology (MeitY) under the Production Linked Incentive Scheme (PIL) for large-scale electronics manufacturing.

Notified on April 1, 2020, the scheme extends an incentive of 4 to 6 per cent on incremental sales (over the 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). A total of 22 applications had applied as of August 1, 2020.

Also read: China not allowed! India approves 16 for incentive scheme, none from China

Ravi Shankar Prasad, Union Minister for Electronics & IT, Communications, Law and Justice said: "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 benchmark for international mobile phone manufacturing companies was to manufacture mobile phones worth Rs 15,000 and above, whereas there wasn't any such benchmark for the domestic companies. The international mobile phone manufacturing companies that are approved under the former 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 percent 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 MeitY. These companies are expected to expand manufacturing operations in a significant manner and grow into national champion companies in mobile phone production.

Six more companies have been approved under the Specified Electronic Components Segment, which include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, and Neolync.

Also read: Samsung, Foxconn, Lava among 16 cos to get nod for govt's PLI scheme for phone manufacturing

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 9,00,000 crore.

The approved companies under Mobile Phone (Domestic Companies) segment have proposed a production of about Rs 1,25,000 crore and those under the specified electronic components segment have proposed a production of over Rs 15,000 crore.

The scheme will not just help in meeting the domestic requirement but is expected to promote exports from India as well.  Out of the total production of Rs 10,50,000 crore in the next 5 years, more than 60 per cent will be contributed by exports of the order of Rs 6,50,000 crore. The scheme will bring additional investment in electronics manufacturing to the tune of Rs 11,000 crore.  The companies approved under the scheme are likely to generate more than2 lakh direct employment opportunities in next 5 years along with creation of additional indirect employment of nearly 3 times the direct employment.

As stated earlier, the domestic value addition is expected to grow from the current 15-20 percent to 35-40 percent in case of mobile phones and 45-50 per cent for electronic components.

Also read: Foxconn, Samsung, others target exports worth $100 billion from India