COVID 19: Mobile Phone Makers Likely To Miss PLI Targets

Smartphone makers are likely to miss targets this year, especially announced under the production-linked incentive scheme. This is the second time in a row when handset makers are likely to miss PLI targets due to the ongoing COVID 19 crisis.

This comes at that time when companies have already reduced the hiring target for this year as most of the production lines are closed. Besides, workers are moving towards their villages as the state Government imposed a lockdown in their territories.

The Government announced that all companies, which come under the PLI scheme need to achieve Rs. 4,000 crores in FY21.

"For FY22, the target was doubled to Rs. 8,000 crores, but we will again lose at least three months due to the second wave," a senior executive of one of the handset makers was quoted by ET. He said, "The scheme is almost falling apart without any confidence measures taken by the government."

India Cellular Electronics Association Asks Government To Consider PLI Targets

In addition, ICEA, which represents leading smartphone brands, said that the Government should consider the last financial year as a zero year. However, the Government is likely to take a call on the relaxations.

It is worth noting that the incentives in the PLI scheme introduced in October last year. The Government has included five domestic, global companies, and six component makers.

"We are facing a two-way challenge... lockdowns and worker health issues are curtailing production capacity in factories. Meanwhile, the domestic market for phones is fast expanding," the executive said. "This is raising a question on the need for exports right now," he added.

Notably, Samsung was the only company that achieved targets; however, Wistron, Lava, and Foxconn have cut production in May.

Companies Might Miss Hiring Targets

The report said that hiring activities have gone out of control companies managed to hire 10,000-15,000 people, whereas the Government wants these firms to generate 50,000 people by the end of this year.

Besides, adding 50,000 people this year, the Government wants smartphone firms to hire 200,000 people between 2020 to 2025. However, we assume that companies are likely to miss the employment target for the coming years as no one knows when the situation is going to improve and when companies will start hiring people again.