Samsung India sanctioned Rs 500cr PLI incentive, against Rs 900cr claimed

After being stuck for around two years, Samsung India will soon receive around Rs 500 crore as incentive for FY21 under the smartphone production-linked incentive (PLI) scheme, official sources said.

Sources said that though the company had claimed incentive of around Rs 900 crore, after reconciling the invoices, it has been found that it’s entitled for payment of around Rs 500 crore. “The matter has now been settled. The company will be getting around Rs 500 crore,” an official requesting anonymity said.

When contacted a Samsung India spokesperson said, “We are currently in advanced stage of discussions with government of India on the incentive payout. Samsung is a committed partner of India for over 26 years. As the leading smartphone player, we have been working closely with various stakeholders to make the PLI scheme a success”.

Though Samsung was the only firm which had qualified for incentives for FY21 as it had achieved the incremental production and sales target set by the government, its claim was stuck due to some discrepancies found by the government in the invoices submitted by the company.

Global companies like Samsung need to make phones priced higher than Rs 15,000 to be eligible to claim incentives under the scheme apart from meeting incremental production and sales target. However, officials examining the invoices had said that the amount could be inflated as the company may have used inter-company transfer to include even phones of lower value. Such inter-company transfer is not possible in the case of another global manufacturer selected under the PLI scheme, Apple, as in its case the phones are made by contract manufacturers like Wistron and Foxconn and transferred to Apple.

Fe was the first to report in September 2022, that disbursement of incentive amount to Samsung was stuck due to discrepancies found by the government in its invoices.

The total outlay for smartphone PLI over five years is Rs 40,951 crore and the incentive ranges around 6-4% annually. For FY21, the total incentive was 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 against 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 was Rs 50 crore and they were required to manufacture phones worth Rs 500 crore in the first year.

Mobile phone manufacturing is the most visible success story of the Rs 1.97 trillion PLI scheme. After PLI, domestic production increased to Rs 3.5 trillion in FY23 from Rs 2.14 trillion in FY20, the year before the scheme was announced. Of the total production of $44 billion of mobile phones in the last financial year, around $11.1 billion worth of phones were exported.

The good run of mobile phone exports is continuing this year also. During April-July, smartphone exports grew 99% on year to touch $4.6 billion. Financial Express