Govt extends PLI scheme for handsets by a year; huge relief for industry

The government has allowed the extension of mobile phones PLI scheme In a year by 2025-26, it brought great relief to homemade brands Dixon, Lava and Micromax, as well as mobile phone makers such as iPhone makers Foxconn and Wistron. The industry has sought an extension of one year since production stopped in 2020 due to a pandemic.

With this announcement on Monday, mobile phone manufacturers will be able to treat mobile phone manufacturing production-linked incentive (PLI) schemes as the first year of production, rather than 21. Namara Sisalaman Said while announcing fiscal stimulus.

In its May 27th edition, the ET reported that the government was considering the industry’s request to allow the extension.

“Companies were unable to meet gradual production requirements for the following reasons: Pandemic-related blockades, restricted personnel movements, delayed plant and machine installations, and component supply chain disruptions. “The turmoil of activity,” said Sisaraman, explaining the one-year extension.

The change in the timeline means that the manufacturer will have to post an incremental production equivalent to 4,000 rupees this year instead of 8,000 rupees in the second year. Therefore, experts say they will have access to a maximum incentive of 6% per year.

The ambitious Rs 41,000 PLI scheme with incentives in the form of cash payments based on investment and increased production targets will make India a more attractive destination and pull companies away from locations such as China and Vietnam. I am aiming for it. The center has set an export target of $ 100 billion worth of mobile phones over the next five years and aims to make the country a global manufacturing hub.

ET reports that Samsung is only one of the 16 companies that have achieved their 2009 goals. smartphone. Unlike other companies, industry executives said they didn’t have to ship plants or machinery to India, they just needed to increase production at their existing facilities.

However, South Korean majors allow the government to be flexible in choosing between 6 and 5 years, so they can claim incentives for 2020-21. This means that investments made in 202-21 will continue to be counted as eligible investments, a statement released by the government said.

The last push of the industry took place in a letter on May 19, citing the second wave and the inability to vaccinate workers as the main reason the factory was not operating optimally. ..
The Indian Mobile Electronics Association (ICEA) has appealed in a letter to the panel responsible for the call for postponement under Section 8.9 of the PLI Guidelines in case of force majeure.

“Karnataka, Tamil Nadu, Andhra Pradesh and Telangana are already blocked, and Uttar Pradesh also has strict restrictions,” said Robbie Group, the curb of the five states where most of the PLI units are located. Was emphasized. “Under these circumstances, even with optimistic estimates, only eight months will be available in 2021-22, yet less will be available to reach the PLI goal for the second year. There is a possibility.”
The handset PLI scheme required foreign companies to invest Rs 25 billion each and generate an incremental production of Rs 400 billion in the first year in order to obtain a direct incentive of 6% as cash back.

To get the same incentive, Indian cell phone makers had to invest 50 rupees each for an incremental production of 500 rupees. In the second, third, fourth and fifth years, manufacturers are required to produce phones worth 8,000 rupees, 15,000 rupees, 20,000 rupees and 25,000 rupees in the base year. This will significantly increase the annual export of mobile phones. Existing $ 3 billion. JioForme