Discrepancy in PLI incentive claimed by Samsung?

Disbursement of incentive amount to South Korean major Samsung Electronics under the production-linked incentive scheme for smartphones for FY21, has got stuck due to some discrepancies found by the government in the invoices submitted by the company.

Samsung had claimed incentives worth around Rs 900 crore for the year but government calculations has pegged it lower. There are differences over the incremental production and sales shown by the company and the ones arrived by the government.

Samsung was the only firm which qualified for incentives for FY21 as it had achieved the incremental production and sales target set by the government.

Highly placed government officials told FE that they have sought certain clarifications from the company, upon receipt of which only some clarity can emerge as to how much amount needs to be disbursed and by when. “At the moment we cannot say by when the incentive amount would be disbursed to the company and how much,” officials said.

Samsung did not reply to an email query on the subject.

The delay in the disbursement assumes significance because on September 9, the government approved 32 beneficiaries under the PLI scheme for large-scale electronics manufacturing for FY22. Domestic firm Padget Electronics, which is a 100% subsidiary of Dixon Technologies, was the first company which received the disbursement of around Rs 50 crore based on its incremental investment and sales figures for FY22. Global firms like Apple’s contract manufacturers Wistron, Foxconn, and Rising Star are also eligible for incentives for FY22, once they submit their invoices, officials said. Samsung is also eligible but is yet to submit its invoices for FY22.

For the contract manufacturers of Apple, FY22 is the first year of PLI as the government rolled over the tenure of the scheme by a year for companies which were not able to meet the first year – FY21 – targets due to Covid-led disruptions in supply chain.

A total of 10 firms – five global and five local – have been selected for the PLI scheme which started in August, 2020. These firms were required to meet the set target for incremental sales of goods in FY21 over the base year of FY20.

Industry sources said that Samsung was able to clock incremental sales of around Rs 15,000 crore during the year (FY21) over the base period, which was also the ceiling for availing the incentive.

The total outlay for smartphone PLI over five years is Rs 40,951 crore and the incentive ranges around 4-6% annually. For FY21, the total incentive was of Rs 5,334 crore. The threshold for qualifying for the incentive was incremental sales of Rs 4,000 crore and maximum Rs 15,000 crore. According to this, Samsung was entitled to get Rs 900 crore (6% of Rs 15,000 crore) as incentive from the government for FY21.

The PLI scheme for smartphones has set different targets for global players like Apple and Samsung and Indian players like Dixon. In the first year, global players were required to make an investment of Rs 250 crore and manufacture goods worth Rs 4,000 crore more than the previous year. The phones made by global players should have an invoice value of over Rs 15,000.

In the case of Indian players, the investment target is Rs 50 crore and they were required to manufacture phones worth Rs 500 crore in the first year. Financial Express