PLI scheme will help mobile manufacturing to become India’s largest exports by 2025: ICEA

The Ministry of Electronics & Information Technology (MeitY) believes that India's electronics hardware manufacturing sector faces a lack of a level playing field vis-à-vis competing nations.

The sector suffers a disability of around 8.5% to 11% on account of lack of adequate infrastructure, domestic supply chain and logistics; high cost of finance; inadequate availability of quality power; limited design capabilities and focus on R&D by the industry; and inadequacies in skill development.

The vision of National Policy on Electronics 2019 (NPE 2019) is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components and creating an enabling environment for the industry to compete globally.

To enable that environment, the Government on June 2nd sent out a call for applications from electronics manufacturers interested in availing the benefits of a set of incentive schemes worth a cumulative Rs 50,000 crore. First announced in March this year, the Centre floated three incentive schemes in an effort to attract global mobile device makers and boost local electronics manufacturing.

The Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing especially offers a production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking, and Packaging (ATMP) units.

The Scheme is expected to boost the electronics manufacturing landscape and establish India at the global level in the electronics sector.

The scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five (5) years subsequent to the base year as defined.

Welcoming the launch of the Rs 42,000 crores-worth Production Linked Incentive (PLI) scheme by the Government, Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA), said, “This scheme is a game-changer for the nation and the industry - a historic development under the leadership of Prime Minister Modi to advance the ‘Make in India (MII)’ program.”

ICEA said that the 2nd of June, 2020 will be commemorated and remembered as a Red Lettered day in the history of the mobile handset manufacturing industry’s journey in the country.

India had eclipsed Vietnam in 2017 to claim the World’s No. 2 mobile handset manufacturing nation tag.

The industry underwent a spectacular, transformative journey with handset manufacturing posting a near 1100% growth in value terms during 2014 – 2019, as well as exports posting an approx. 3000% during 2016-19.

ICEA felt confident that the formal institution of the PLI scheme will greatly hasten up this process and fulfil the Prime Minister’s Vision to establish India as the World’s No. 1 mobile handset manufacturing destination status.

“The Production Linked Incentive (PLI) instituted on mobile phones is indeed the first-ever scheme ever announced by a Government in the Post – Independence period, whereby, similar production linked incentive is extended for both domestic Indian champions and global supply. The policy was a result of ICEA’s relentless focus and strenuous efforts put forth during the past 3-4 years along with the Government, which has culminated into a mindset change amongst policymakers and is leading to a path-breaking step which can accelerate the emergence of a new breed of Indian domestic Champion companies who can reach out to the world,” added Pankaj Mohindroo.

ICEA said that it will continue to work with the Government and various industry stakeholders, located both outside India as well as within India, on reactivating and rejuvenating a new formulation of outreach initiatives and handholding support to help actualize these objectives covered under PLI on the actual grounding of investments.

ICEA also intends to support India’s pursuit to create a One Trillion Dollar Electronics Hardware Manufacturing industry over the next 7-8 years.