Big relief! Govt extends PLI scheme for mobile manufacturers by a year

Finance Minister Nirmala Sitharaman on Monday announced the government has extended the production-linked incentive (PLI) scheme for the large-scale electronics manufacturing sector with a focus on mobile phones by a year until 2025-26.

FM Sitharaman, while announcing new measures to revive the COVID-hit economy, said, "Now we have extended the tenure of the scheme from 2020-21 to 2025-26. Earlier, it would have ended in 2024-25. For those who have made investments even in 2020-21, they will also get counted because we have given them the option of choosing any five years for meeting their production target under the scheme."

"While manufacturers were earlier allowed to claim a six per cent incentive for incremental production during the first year, 2020-21, they will now have the option to choose 2021-22 as the first year of the scheme for similar benefits," she added.  

“Companies have been unable to meet incremental production conditions. Disruption in production activities due to pandemic related lockdown, restriction on movement of personnel, delay in installation of plant and machinery and disruption in supply chain of components,” said Sitharaman.

The scheme, which was originally launched for five years - between 2020-21 and 2024-25, will now be valid till 2025-26, offering a breather to the manufacturers who had been impacted due to repeated COVID-19 lockdowns in the last year.

The base year of the scheme 2019-20 remains the same, however, the companies will now have the option to choose five years either from the base year or from 2020-21 for calculation of the incentives.

The Ministry of Electronics and Information Technology (MeitY) has cleared 16 proposals from both domestic and international companies entailing an investment of Rs 11,000 crore under the PLI scheme to manufacture mobile devices worth Rs 10.5 lakh crore over five years.

The companies include Apple's contract manufacturers - Foxconn Hon Hai, Wistron and Pegatron, along with Rising Star and Samsung. Domestic manufacturers include Lava, Bhagwati (Micromax), Padget Electronics (Dixon Technologies), UTL Neolyncs and Optiemus.

Pankaj Mohindroo, Chairman, India Cellular and Electronics Association, said that the extension would support the government's efforts to establish India as an integral part of the electronics sector's global value chain and also support developing Indian Champion companies to tap the global as well as domestic markets.

Mohindroo added, "It is a great win for India. This decision will enable the nation to become a global electronics manufacturing destination and also send the right message to global investors in the pandemic time. It shows that India's governance is deeply compassionate, realistic and always standing behind trade and industry."