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Govt May Relax PLI Targets for Mobile Phone Makers in India After Difficult FY21: Report

By: Shouvik Das


Last Updated: May 27, 2021, 13:40 IST

Govt May Relax PLI Targets for Mobile Phone Makers in India After Difficult FY21: Report

The relaxed PLI targets may push initial production target set for mobile phone makers in India back by a year, after Covid-19 and the chip supply shortage led to a difficult FY21.

The government of India may consider relaxing the production linked incentive (PLI) timelines for mobile phone makers in India, after the industry withstood a difficult year through FY 2021-21 due to multiple factors. A report on the matter by The Economic Times states that the government is now considering the possibility of taking FY 2021-22 as the first year of production instead of 2020-21. This would mean that for mobile phone makers in India, the production target for mobile phones would remain at Rs 4,000 crore, instead of being increased to Rs 8,000 crore for the second year – as is the guideline.

The relaxation would mean that manufacturers would be able to retain the limited production target for this year, until March 2022, and also avail the 6 percent incentive in manufacturing. The necessitated targets laid out by the Indian government look at manufacturers to incrementally increase manufacturing volumes to continue earning government incentives. The targets refer to the companies being required to match a certain level of production for devices to be sold within India, as well as for being exported out of India. The ET report on the matter cites experts to state that while pushing the revenue targets back would not hurt the government, it would markedly benefit manufacturers in terms of mitigating costs through a difficult year.

While the Ministry of Electronics and Information Technology (Meity) had previously rejected the idea, citing the example of Samsung as a manufacturer that met its annual target, it is now seemingly reconsidering the option. The update comes as Samsung remains the only of 16 manufacturers under the PLI scheme to have achieved its target. Unlike Samsung, which has already been assembling devices in India for a while, other manufacturers such as Foxconn, Wistron Corp and the likes have had to set up its plants anew. This has compounded expenses on top of a difficult year, which saw two waves of the Covid-19 pandemic, as well as a global chipset supply shortage that would have definitely impacted assembly lines.

The PLI scheme fronted by the Indian government has attracted a number of mobile phone manufacturers, who are targeting the revenue incentives to see higher earnings from the manufacturing business. For India, the PLI scheme has been the nation’s pitch to global device makers to consider India as a manufacturing hub – something that China has so far held monopoly over. Global players have also been increasingly concerned about China and the role that its companies have played, with many claiming that most major Chinese companies have too tight an oversight on businesses, and many even have direct ties with the nation’s government.

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first published:May 27, 2021, 13:40 IST
last updated:May 27, 2021, 13:40 IST