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Handset makers cleared for PLI benefits seek clarity over targets, time frame

Mobile phone makers approved by the government for receiving production-based incentives are still in a bind over targets set by the government and the stipulated time to achieve those targets.

The government on Tuesday approved the applications of 16 electronics companies including 10 mobile phone manufacturers for rewards under the product-linked incentive (PLI) scheme – an announcement which was delayed by two months.

“We have not yet received any official communication from the government regarding targets and the beginning date of the Scheme which was earlier notified as August 1,2020,” said Sudhir Hasija, Chairman of UTL Neolyncs, the maker of Karbonn mobiles.

“We are expecting the letters from the government with all company-specific details this week itself and will ramp up production based on that,” he said.

The PLI scheme offers an incentive of 4 per cent to 6 per cent on incremental sales of handsets over base year which is FY19-20. The scheme was expected to start in August but was delayed by two months, likely hurting plans by companies to meet their March-end production targets. The delay was on account of differences over whether the Cabinet approval was needed for the scheme since it entails investments over Rs 1,000 crore, ET had reported.

Companies are specifically confused over targets of the current fiscal year, one, because of delay in announcing PLI rewards and two because most companies will require at least 2-3 months to expand manufacturing based on targets.

“Till now, there was uncertainty over which companies will actually win the reward,” an executive at an Indian manufacturing company told ET.

“Now that we have been selected, we have to invest in adding more production lines such as SMT, expand capacity and win contracts from brands for both domestic production and exports. The process will need at least 3 months. I am hopeful the government will take these factors under cognisance for the current year,” he said.

In fact, the latest entrant in Indian handset manufacturing industry, the iPhone-maker Pegatron, has not started operations yet and is in talks with state governments to set up a plant.

“The approved targets will be same as those submitted by the companies in their respective applications and the government will start sending letters this week itself,” said Pankaj Mohindroo, chairman of India Cellular and Electronics Association (ICEA), which represents major global handset brands including Xiaomi, Apple, Motorola, Nokia, Oppo, Vivo, Realme, besides contract manufacturers Foxconn, Wistron, Dixon and Indian brands Lava, Micromax, Karbonn.

“As for Pegatron, the production target will be counted for five years beginning FY21-22 as it is a new entrant and it makes sense to give them time to set up base first,” Mohindroo said. NewsXtreme

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