Samsung, Apple contract manufacturers apply for benefits under PLI scheme

Joanna Estrada
August 2, 2020

Pegatron, Apple's second-largest contract manufacturer, and Samsung were among 22 companies to have commited investments worth Rs11,000 crore while applying for the government's production-linked incentive scheme that seeks to establish India as a smartphone export hub rivalling northeast Asia's electronics powerhouses.

Samsung has a plant on the outskirts of New Delhi that it describes as the world's biggest mobile phone manufacturing plant.

Pegatron, one of Apple's top suppliers, has yet to open a plant in India, but is in talks with various states to set up operations, according to sources.

The government had notified three schemes on April 1 for the promotion of electronics.

Meanwhile, it has been confirmed that over 22 applications were received, under the scheme.

The production-linked incentive (PLI) plan offers companies cash incentives on additional sales of devices made locally over five years, with 2019-2020 as the base year.

The ministry of electronics and information technology (Meity) has received applications from 22 global and domestic firms under the Rs 41,000-crore production linked incentive (PLI) scheme.

Over the next five years, the scheme is expected to lead to total production worth around Rs 11.5 lakh crore.

Under the scheme, to avail the graded incentives ranging between 4% and 6% over a five-year period, manufacturers will have to produce high-end phones (with freight on board value of more than $200) of more than Rs 4,000 crore over and above their production level in the country in the base year.

"We are optimistic and looking forward to building a strong ecosystem across the value chain and integrating with the global value chains, thereby strengthening electronics manufacturing ecosystem in the country", Prasad said.

"In the next five years, mobile phones worth about Rs 9 trillion in the category of above Rs 15,000 per unit are expected to be produced as per the proposals submitted by the companies".

Prasad added that companies will be eligible for incentives from August 1. As per the government estimate, this is likely to lead to creation of 3 lakh jobs directly, and over 9 lakh indirect jobs.

Domestic value addition is expected to grow from the current 15-20 per cent to 35-40 per cent in case of mobile phones and 45-50 per cent for electronic components, he further said. He said, "I do not wish to take the name of any country". If the manufacturers achieve that, it would significantly enhance annual exports of phone handsets from the existing $3 billion. Ravi Shankar Prasad, without naming any country, reiterated that these rules on security and investment will need to be complied with.

Other reports by Click Lancashire

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