PLI scheme set to bolster localistion of mobile phone production

Under the $6.65 billion PLI scheme, government extends an incentive of 4 to 6 per cent on incremental sales (over base year 2019-20) of smart phones under target segments that are manufactured in India to eligible companies, for a period of five years. 

The scheme was open for filing applications till 31 July 2020. Incentives are applicable under the scheme from 1 August 2020.

A total of 22 companies, including international mobile manufacturing companies, have filed application under the PLI scheme.

The international mobile phone manufacturing companies that have applied under Mobile Phone (Invoice Value Rs15,000 and above) segment are Samsung, Foxcon Hon Hai, Rising Star, Wistron and Pegatron. Out of these, 3 companies namely Foxcon 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 per cent of global sales revenue of mobile phones and this scheme is expected to increase their manufacturing base manifold in the country, Prasad said.

Under Mobile Phone (Domestic Companies) segment, Indian companies, including Lava, Dixon Technologies, Bhagwati (Micromax), Padget Electronics, Sojo Manufacturing Services and Optiemus Electronics, have applied for inclusion in the scheme. 

These companies are expected to expand their manufacturing operations in a significant manner and grow into national champion companies in mobile phone production.  

Ten companies have filed applications under the Specified Electronic Components segment, which include AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, Vitesco and Neolync.

Over the next 5 years, the scheme is expected to lead to total production smart phones and components valued at about Rs11,50,000 crore. Out of the total production, companies under Mobile Phone (Invoice Value Rs15,000 and above) segment have proposed production of over Rs9,00,000 crore. The companies under Mobile Phone (Domestic Companies) segment have proposed production of about Rs2,00,000 crore and those under Specified Electronic Components segment have proposed production of over Rs45,000 crore

The scheme is expected to promote exports significantly. Out of the total production of Rs11,50,000 crore in the next 5 years, more than 60 per cent worth Rs7,00,000 crore will be exported. 

The scheme is expected to bring in additional investment in electronics manufacturing to the tune of Rs11,000 crore.

Government expects the scheme to generate approximately 3 lakh direct employment opportunities in the next 5 years along with creation of additional indirect employment of nearly 9 lakh. Domestic value addition is expected to grow from the current 15-20 per cent to 35-40 per cent in case of mobile phones and 45-50 per cent for electronic components.

With the demand for electronics in India expected to grow manifold by 2025, the minister expressed confidence that PLI scheme and other initiatives to promote electronics manufacturing in India a competitive destination for electronics manufacturing and give boost to AtmaNirbhar Bharat. 

Creation of domestic champion companies in electronics manufacturing under thescheme will give fillip to vocal for local while aiming for global scale.

Prime Minister Narendra Modi’s major initiatives like `Digital India’ and `Make in India’ along with his vision of `Atmanirbhar Bharat’, envisions positioning India as a global hub for Electronics System Design and Manufacturing (ESDM) by focusing on size and scale, promoting exports and enhancing domestic value addition by creating an enabling environment for the industry to compete globally.

Apple already assembles some its smartphones, including the iPhone 11, via Foxconn and Wistron's local unit in India. reports citing sources said Foxconn has proposed to invest $1 billion in India.

India hopes it will help turn the country into a global smartphone export hub like neighbouring China.

Pegatron, one of Apple's top suppliers, has yet to open a plant in India, but is in talks with various states to set up operations, according to sources.

South Korea's Samsung Electronics Co Ltd has also applied for PLIs, Prasad told a news conference.

Samsung, which runs the world's biggest mobile phone manufacturing plant on the outskirts of New Delhi, already exports devices made at the plant.

Prasad said the scheme is expected to increase Apple’s and Samsung’s manufacturing base manifold in India.

Lava, which once also assembled some models for China's Lenovo, was among the Indian companies that have applied for the scheme, Prasad added.

India's smartphone sector is a bright spot in the South Asian nation's economy, thanks to Prime Minister Narendra Modi's emphasis on local manufacturing in a bid to create jobs.

With more than 1 billion wireless subscribers and roughly 350 million users still on basic phones, India is expected to be the next smartphone manufacturing hub as firms propose Rs11 lakh crore mobile phone production under the PLI scheme.