Government Announces Huge Relief Package For Handset Industry; Revised PLI Scheme

In order to give relief to mobile phone makers, the Government has finally extended the PLI scheme for mobile phones to 2025-26. Notably, mobile phone makers Lava, Dixon, Micromax, Wistron, and Foxconn are expected to be benefitted from the extension.

"This extension would not only support the Government's efforts to establish India as an integral part of the Global Value Chain (GVC) in the electronics sector, it will also support developing Indian Champion companies to tap the Global as well as Indian markets through the PLI," Pankaj Mohindroo Chairman, India Cellular and Electronics Association (ICEA) said.

He said that this decision is expected to make India a global electronics manufacturing destination and send the right message to investors. Notably, ICEA is representing seven brands, such as Nokia, Wistron, Flextronics, Lava, Vivo, Apple, Motorola, Apple, and more.

"The government's decision to extend the PLI scheme for mobile phone manufacturing by a year offers a much-needed respite to the manufacturing industry that is reeling under the impact of the pandemic," said Rajesh Agrawal, Director, Micromax.

Details Of Revised Production-Linked Incentive Scheme

The new PLI scheme will allow companies to treat FY 22 as the first year of the scheme for mobile phone manufacturing. However, experts believe that the change in the timeline means smartphone makers have to post-production worth Rs. 4,000 crores in the financial year. Then, only companies can avail 6 percent incentives in the year.

Under the new scheme, all foreign companies need to make an investment of Rs. 250 crores each and they have to produce output close to Rs. 4,000 crores in the first year. However, domestic firms need to invest Rs. 50 crores each for Rs. 500 crores of output.

Notably, Samsung was the only company that manages to meet the target in the last financial year. In fact, industry executives said that the company increased production at its manufacturing plants.

Main Reason Behind Launching Revised PLI Scheme

The Government is planning to make India a manufacturing hub and likely to exports 100 million smartphones in the next five years. However, we believe that the revised PLI scheme worth Rs. 41,000 crores are expected to make India is an attractive destination for investors from China and Vietnam.