Apple, Samsung get approvals to make mobile phones in India under PLI scheme

Samsung, Rising Star, a string of contract manufacturers for Apple as also a bunch of home-grown players are among the mobile phone manufacturing firms that have won approvals to do business in India under the PLI (Performance-linked incentives) scheme. The combined value of their merchandise is estimated at a staggering Rs 10.5 lakh crore over the next five years and many multiples of the current investment Rs 11,000 crore. Of the total production value, 60% or Rs 6.5 lakh crore worth of goods is to be exported. Approximately more than two lakh direct jobs are expected to be created over the next five years while indirect employment opportunities are expected to number nearly three times that.

The local companies that have won approvals and can use the PLI sops are Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics. Six companies have been given the go-ahead under the specified electronic components segment: AT&S, Ascent Circuits, Visicon, Walsin, Sahasra, and Neolync.

Foreign players can only make phones that have an invoice value of Rs 15,000 or more, for the local players, there is no such bar. Apple, with a share of 37% and Samsung, with a share of 22%, together account for nearly 60% of the global revenues from mobile phones. Foxconn Hon Hai, Wistron and Pegatron are the contract manufacturers for Apple who will be making phones here.

In all, 16 applications were approved by the ministry of electronics and IT (Meity) on Tuesday. The confirmations have been somewhat delayed owing to confusion about whether the proposals cleared by Meity needed approval from the Union Cabinet. The department of expenditure, however, clarified that a Cabinet nod was not required.

The objective of the scheme is to promote five global and five local champions as also encourage component manufacturers. The subsidy outlay for the five global firms is Rs 28,150 crore, approximately Rs 5,630 crore per company over five years. For local firms, the total incentive outlay is Rs 7,300 crore or about Rs 1,460 crore per company, again, over five years. For electronic components, six eligible applicants will be given Rs 900 crore as incentives. The domestic value addition is expected to increase from the current 15%-20% to 35%-40% for mobile phones and 45%-50% for electronic components.

The PLI scheme for large scale electronics manufacturing was notified on April 1, 2020. It provides an incentive of 4% to 6% on incremental sales–over the base year of FY19-20—for goods in certain segments made in India over a period of five years. Incentives are applicable under the scheme from August 1, 2020. Telecom and IT minister, Ravi Shankar Prasad said 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.