PLI scheme for mobile phones will take some time to take off

The mobile phone makers seem to be facing some constraints in meeting the targets set for them on which they qualified for the PLI scheme.

The government had cleared 10 manufacturers to avail of benefits under the production-linked incentive scheme. These included overseas companies: Foxconn, Wistron, Pegatron and Samsung and Indian companies Lava, Micromax, Karbonn, Dixon and Optiemus.

To qualify under this scheme, the foreign companies needed to make an incremental investment over base year of  Rs 250 crore in the first year for phones with an invoice value of Rs 15,000 and above. For domestic companies incremental investment value is Rs 50 crore for any phones produced.

The target for incremental sales of manufactured goods over base year is Rs 4,000 crore each for foreign companies while for domestic companies, it is Rs 500 crore.

Proposed incentive rate in the first year for both domestic as well as foreign companies is 6%.

The incremental investment of Rs 10.5 trillion over five years, of which 65 per cent will be for exports is anticipated. If the scheme takes off, Apple Inc is expected to shift 10-20 per cent of its manufacturing capacity from China to India, and global component players would follow to cater to them.

The phone makers now fear that their March-end targets would be difficult to meet. Given the global component shortage, particularly semiconductor chips; the shorter lead time from the date the approvals came in; along with logistic challenges presented by the pandemic, the makers are looking at a 3-4 month extension from the government.
CT Bureau