Apple’s three contract manufacturers and Samsung are among 16 companies that received formal government approvals under a $6.65 billion production-linked incentive (PLI) scheme. This is part of India’s plans to encourage local manufacture of consumer electronics over the next five years in order to increase exports.
A statement from the Ministry of Electronics and Information Technology late last evening said these companies would be manufacturing smartphones and other electronics components worth more than $143 billion over the next five years. This is part of Prime Minister Narendra Modi’s Make in India scheme where companies stand to gain between 4% to 6% on additional sales of goods produced locally over the next five years.
The scheme is part of India’s drive to boost manufacturing in the country, which had fallen to abysmal levels over the past decade due to cheaper Chinese imports. The ministry’s statement said under the new scheme 60% of locally made products would be exported.
Companies that received approval in this round also include Indian names Lava, Micromax (Bhagwati), Padget Electronics, UTL Neolyncs, and Optiemus Electronics. However, some of the predominant Chinese names such as OnePlus, Oppo, Vivo and Realme. During a media briefing on the upcoming Vivo V20 series , Vivo India’s Nipun Marya, who heads marketing and strategy said his company hadn’t applied for the productivity-linked incentive scheme.
What is the PLI scheme?
The government’s production linked incentive scheme (PLI) for large electronics manufacturing was proposed by federal government whereby it provided a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones and electronic components.
The scheme was introduced following India’s border skirmish with China that caused a relook at New Delhi’s trade relations with Beijing and resulted in banning of more than 240 mobile apps, including TikTok and PUBG, in the country. Chinese phones command about 80% of India’s growing market, which at one time was led by Korean giant Samsung.
Apple’s contract manufacturing partners Foxconn, Pegatron and Wistron, have at different stages announced their investment intention in India with reports even suggesting the company’s latest flagship, the iPhone 12, could be manufactured out of India from 2021.
Besides bringing in additional foreign exchange through exports, the new PLI scheme would also generate more than 200,000 direct jobs over the next five years besides more than 600,000 indirect employment opportunities, the ministry said in its statement.
“Apple and Samsung together account for nearly 60% of global sales revenue of mobile phones and this scheme is expected to increase their manufacturing base manifold in the country,” the statement concluded.