New schemes to boost mobile, electronics manufacturing

The Government of India has launched production linked incentive schemes (PLIs) for large scale mobile and electronics manufacturers that are expected to create new opportunities

August 1, 2020

A 4-6 per cent incentive will be applied to goods produced that are under the target categories.

The five-year scheme is expected to lead to 300,000 new jobs and a 60 per cent rise in export.

The production target set for mobile phones from domestic manufacturers is Rs.2 trillion.

Over 22 companies have applied for the PLI Scheme, including Samsung and Ascent Circuits.

The Government of India has announced Production Linked Incentive Schemes (PLIs) for large scale mobile and electronics manufacturing. With five years, an incentive of 4-6 per cent will apply to goods produced that are under the target categories. The production target set for Mobile phones (Domestic Companies) is Rs.2 trillion, and Rs.9 trillion for Mobile Phones with an invoice value of Rs.15,000 and above. Specified Electronic Components have an assigned production target of Rs.450 billion. 

In anticipation of rising demand for the aforementioned commodities by the year 2025, the PLIs are expected to create 300,000 employment opportunities and a 60 per cent increase in export volume. Value addition is expected to increase by 45-50 per cent for electronic components and 35-40 per cent for Mobile Phones. As of this date, over 22 companies have applied for the PLI Scheme with names including Samsung, Ascent Circuits, Foxconn Hon Hai, Sahasra and Pegatron among others. 

The Electronic System Sector in India chiefly produces two kinds of commodities: (i) design and design-related intelligence, (ii) hardware products affiliated with multiple sectors including nano-electronics, defence, consumer electronics, and IT among others. The National Policy on Electronics (NPE) 2019 which served as an amendment to the policy introduced in 2012 postulates measures to amplify domestic production of both design-based components and hardware products. The Policy also aims to transform India into a competitive global participant in Electronic Systems production with a turnover amount of US$400 billion by the year 2025. 

The Manufacturing sector in India at large is one of immense potential for growth and disruption. Anchored in superior digital infrastructure and 100 per cent FDI, the sector is also conducive for foreign investment and private sector participation. Furthermore, the recent refinement of the Insolvency and Bankruptcy Code provides investors with a wide variety of opportunities to explore. Under the aegis of ‘Atmanirbhar Bharat’, the sector can look towards making significant progress in achieving the targets set by the PLIs as well as the National Policy on Electronics (NPE) 2019.