Government's Proposal for Revamped PLI Scheme
The government is planning to continue supporting smartphone production in India through a revamped production-linked incentive (PLI) scheme after the current one ends on March 31. This new scheme will prioritize financial incentives linked to domestic value-addition targets.
Current PLI Scheme Overview
- Existing incentives are based on targets for incremental investment and production value over five years.
- Additional monitoring of exports, value addition, and direct employment, though not mandatory for receiving financial benefits.
- Budget allocation for the five-year scheme was ₹34,193 crore, with expected payouts around ₹20,000 crore.
- Key recipients include Apple vendors Tata Electronics and Foxconn, as well as Samsung and Dixon Technologies.
Challenges and Strategic Adjustments
- Post-Galwan border tensions, restrictions were imposed on Chinese FDI, affecting component supply chains.
- Apple Inc adjusted strategies, building a domestic supply chain of around 40 companies due to these restrictions.
- Realization of unfeasibility in meeting 40% value addition target within five years, given China's 30-year development timeline.
Electronics Component Manufacturing Scheme (ECMS)
- Initiated to bolster local component supply chains and manufacturing capacity.
- Attracted over 82 players for component and machinery manufacturing.
- Budget increased by 75% to ₹40,000 crore to enhance capabilities.
Future Directions: Beyond Assembly
- Incentives likely to focus on domestic value addition.
- Current value addition levels are around 18–20%, below the initial 40% target.
- ECMS aims to localize components and manufacturing equipment to offset cost disadvantages compared to countries like Vietnam and China.
