Govt delays PLI sops for smartphone makers

Errors in invoices submitted by Samsung have led to deeper scrutiny, which has caused delays in the release of sops by the government for smartphone manufacturers who have achieved targets under the production-linked incentive (PLI) scheme, a report in the Economic Times said.

A person with the knowledge of the development that the South Korean smartphone giant Samsung had submitted invoices with errors. Therefore, there is a delay in the release of incentives.

Other than Samsung, overseas majors Hon Hai (Foxconn) and Wistron qualified for the incentives under the PLI scheme. Indian manufacturers like Dixon Technologies and UTL Neolyncs also qualified for the same. However, these companies are waiting for clarification from the Ministry of Electronics and Information Technology (MeitY).

An anonymous company source said that since this will be the first significant payout under the scheme, the government is being extra cautious and double-checking the numbers.

The handset PLI scheme, which is worth Rs 41,000 crore, entails incentives in the form of cash payouts based on investment by the companies and targeted investment in production. The scheme involves graded incentives for such companies. For each of the first two years, the companies get 6 per cent cash back for incremental sales of goods, 5 per cent for the next two years each, and 4 per cent for the fifth year.

To avail of a 6 per cent direct incentive as cashback, foreign handset makers were required to invest Rs 250 crore each and produce an incremental output of Rs 4,000 crore in the first year and Rs 8,000 crore in the second. However, to get the same incentives, Indian companies had to invest Rs 50 crore each for Rs 500 crore of incremental output.

Samsung was the only company to meet production targets in 2020-21, while 2021-22 was the first year for Dixon, Hon Hi (Foxconn), Wistron, and UTL. Samsung also met the production targets in 2021-22. Business Standard