India is taking several reformative actions to help the country be less import-dependent and be more self-reliant.
The plan for this is to be optimistic in building a strong ecosystem across the value chain and integrating with the global value chains, thereby strengthening the electronics manufacturing ecosystem in the country. This is why the government of India brought out the Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing.
The PLI scheme was notified on 1st April 2020, 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).
Today, under the PLI scheme, the Ministry of Electronics and Information and Technology (MeitY) has approved 16 eligible applicants.
While giving approval of eligible applicants under the PLI Scheme, Ravi Shankar Prasad, Union Minister for Electronics & IT, Communications, Law, and Justice said that the PLI scheme has been a huge success in terms of the applications received from global as well as domestic mobile phone manufacturing companies and electronic components manufacturers.
According to the Union Minister, the 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.
The international mobile phone manufacturing companies that are approved under Mobile Phone (Invoice Value INR 15,000 and above) Segment are Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron.
Out of these, 3 companies namely 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 are approved by MeitY.
These companies are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production.
Six companies are approved under the Specified Electronic Components Segment which includes AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, and Neolync.
Over the next 5 years, the approved companies under the PLI Scheme are expected to lead to the total production of more than INR 10,50,000 crore (INR 10.5 lakh crore). Out of the total production, the approved companies under Mobile Phone (Invoice Value INR 15,000 and above) segment have proposed production of over INR 9,00,000 crore, The approved companies under Mobile Phone (Domestic Companies) segment have proposed production of about INR 1,25,000 crore and those under Specified Electronic Components segment have proposed a production of over INR 15,000 crore.
The companies approved under the scheme are expected to promote exports significantly. Out of the total production of INR 10,50,000 crore in the next 5 years, around 60% will be contributed by exports of the order of INR 6,50,000 crore.
The companies approved under the scheme will bring additional investment in electronics manufacturing to the tune of INR 11,000 crore.
The companies approved under the scheme will generate more than 2 lakh direct employment opportunities in the 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.
With the demand for electronics in India expected to grow manifold by 2025, the Union Minister expressed confidence that the PLI scheme and other initiatives to promote electronics manufacturing will help in making India a competitive destination for electronics manufacturing and give a boost to AtmaNirbhar Bharat.
The government strongly believes that the creation of domestic champion companies in electronics manufacturing under this scheme would give a fillip to vocal for local while aiming for global standards.
Commenting about the approval, Pankaj Mohindroo, Chairman, ICEA, said, “The approval for global companies is on expected lines. The approval for Indian Companies is a very fair hand dealt and each company has got one approval. Now the challenge begins i.e can these future Indian champions build core design and brand capabilities and also scale up to become globally competitive or some of them use it tactically and fade out with the PLI incentive. A leap in mindset is required and I am sure once bitten twice shy—they have learned their lessons. The components PLI is not to the nation’s potential as of now and all of us will have to work extremely hard on building this further.”