Ministry of Electronics and Information and Technology (MeitY) has approved 16 eligible applicants under the PLI Scheme. Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing 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).

Other highlights

    • 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 includingLava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics are approved by MeitY who are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production.

    • 6 companies are approved under the Specified Electronic Components Segment which include 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 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 a production of overINR 9,00,000 crore.

    • The approved companies under Mobile Phone (Domestic Companies) segment have proposed a production of about INR 1,25,000 crore.

    • Those under Specified Electronic Components segment have proposed a production of over INR 15,000 crore.

    • 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 next 5 years along with 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) 

The scheme offers a production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units. The Scheme would tremendously boost the electronics manufacturing landscape and establish India at the global level in electronics sector. Creation of domestic champion companies in electronics manufacturing under the Scheme will give fillip to vocal for local while aiming for global scale.

The scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five (5) years subsequent to the base year as defined. 

The Scheme is open for applications for a period of 4 months initially which may be extended. Support under the Scheme shall be provided for a period of five (5) years subsequent to the base year 

The Scheme will be implemented through a Nodal Agency which shall act as a Project Management Agency (PMA) and be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by MeitY from time to time.

Background

The domestic electronics hardware manufacturing sector faces lack of a level playing field vis-à-vis competing nations. The sector suffers disability of around 8.5% to 11% on account of lack of adequate infrastructure, domestic supply chain and logistics; high cost of finance; inadequate availability of quality power; limited design capabilities and focus on R&D by the industry; and inadequacies in skill development. 

The vision of National Policy on Electronics 2019 (NPE 2019) is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components and creating an enabling environment for the industry to compete globally.

(The author is a trainer for Civil Services aspirants. The views expressed here are personal.)