India okays incentives to 16 smartphone manufacturing suppliers

India on Tuesday said it approved incentives to 16 companies, including top Apple suppliers Foxconn, Wistron and Pegatron, as part of the strategy to bolster smartphone production in the country.
Lava smartphone manufacturing
The $6.65 billion production-linked incentive scheme is part of the government’s aim to make the country into an export and manufacturing hub, an official statement from the ministry said on Tuesday.

India government is expecting smartphone production of Rs 10.5 lakh crore and exports of Rs 6.5 lakh crore over the next five years. The development will be a major boost to Prime Minister Narendra Modi’s Make in India and AtmaNirbhar Bharat vision.

Apple (37 percent) and Samsung (22 percent) together account for nearly 60 percent of global sales revenue of mobile phones and this scheme is expected to increase their manufacturing base manifold in the country, an official statement said.

The companies have to invest to tap into the scheme. The government did not disclose what investment Foxconn, Wistron and Pegatron, which is yet to start Indian operations, will make.

Reuters previously reported that Foxconn, Wistron and Pegatron plan to invest a total of almost $900 million in India in the next five years to benefit from the scheme.

Samsung, which runs the world’s biggest mobile phone manufacturing plant on the outskirts of New Delhi, also got approval.

Five Indian companies, including Lava, Micromax, Padget Electronics, UTL Neolyncs and Optiemus Electronics got confirmation.

Further, six companies approved under the Specified Electronic Components Segment are AAT&S, Ascent Circuits, Visicon, Walsin, Sahasra and Neolync.

The approved companies are expected to produce smartphones and components of $143.05 billion.

The scheme offers a production-linked incentive involving cash worth 4 percent to 6 percent of additional sales of goods made locally over five years, with 2019-2020 as the base year.

The PLI scheme for large electronics manufacturing notified on April 1, 2020, extends an incentive of 4-6 per cent on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20).

The ministry said the companies approved under the scheme will bring additional investment in electronics manufacturing to the tune of Rs 11,000 crore.

The companies will generate more than 2 lakh direct employment opportunities in the next five years along with creation of additional indirect employment of nearly 3 times the direct employment.

“The PLI scheme has been a huge success in terms of the applications received from global as well as domestic mobile phone manufacturing companies and electronic components manufacturers,” Ravi Shankar Prasad, Union Minister for Electronics and IT, said in a tweet.

ICEA Chairman Pankaj Mohindroo said: “The approval for companies is on expected lines. The approval for Indian companies is very fair and each company has got one approval.”

He noted that the challenge would be whether these Indian companies build core design and brand capabilities and also scale up to become competitive, or some of them use it tactically and fade out with the PLI incentive.