India extends incentive scheme for electronics manufacturers

The India government announced the extension of the tenure of production-linked incentive scheme for smartphones by a year.
This will be a major relief for smartphone / electronics makers as several manufacturers were unable to meet the first year (FY21) sales target due to Covid-led disruptions. The termination year of the scheme will now be FY26 instead of FY25. However, the outlay, investment and sales targets, base year, and incentive structure will remain the same.

The government has also made an additional allocation of Rs 19,041 crore for the BharatNet broadband project. The total project cost will be Rs 61,109 crore, including the already approved amount of Rs 42,068 crore in 2017.

The extension of the PLI scheme will benefit the contract manufacturers of Apple like Foxconn, Rising Star, and Wistron, as well as five domestic manufacturers as they will get to choose any five years of the six year tenure to meet their targets.

South Korean manufacturer Samsung Electronics could meet the first year sales target and it will get its incentives for the year. In future, it will also have the flexibility to adjust a year for meeting its targets if it wants for any unforeseen reason.

India government selected 10 firms — 5 global and 5 local — for the PLI scheme which started in August 2020, and are required to meet set targets for incremental investment and sales over the base year, which is FY20. The total outlay for smartphone PLI over five years is Rs 40,951 crore and the incentive ranges between 4-6 percent annually.