PLI scheme timeline for smartphone makers should be deferred

The Indian government had introduced the Production Linked Incentive (PLI) scheme for smartphone manufacturers to make India a global mobile manufacturing hub. Many tech giants, including Apple and Samsung, had participated in the government’s scheme to earn cashbacks and incentives.

But the companies were only eligible to receive cashbacks when they met their yearly targets. Under the scheme, any foreign company setting up its manufacturing unit in India had to invest at least Rs 250 crore and produce an output of Rs 4,000 crore in the first year for receiving the 6% cashback from the government. Simultaneously, the minimum investment required for Indian companies was Rs 50 crore, and the target set was Rs 500 crore for the first year.

Only Samsung could meet the target set by the government in the first year and thus is the only company that will receive the incentives. But the industry bodies have a problem with this.

Push the PLI timeline a year ahead
According to an ET Telecom report, the top industry associations have asked the government to defer the timeline of the PLI scheme by one year. This is because nine out of the ten companies involved in the scheme couldn’t meet their yearly targets.

The nine concerned companies couldn’t meet their targets because of the disruption in the supply chain due to the pandemic. The multiple lockdowns in 2020 further escalated the time taken by the companies to set up production facilities.

The industry associations have argued that only Samsung had a big running production facility in India, and all of the other companies had to open new facilities and bring in technicians from overseas, which took a lot of time.

At the same time, the government says that since Samsung has achieved the desired target, how can the PLI timeline be deferred. Had it been the case of no company included in the scheme meet the target, then the government could have considered pushing the timeline of the scheme one year ahead, but that can’t be the case now since Samsung has reached the target.

The industry associations have argued that Samsung didn’t need to shift its production from China to India and didn’t need to bring technicians from overseas. Because of the slowdown and ban on international flights during 2020, it became hard for the companies to bring people to India. All of this resulted in the delayed installation of equipment and delayed production of mobile devices in India.

Samsung will be a little disappointed if the government defers the timeline for the companies since the South Korean tech giant reached the target in a fair and square manner. TelecomTalk