The government will pump in ₹42,000 crores through a production-linked (PLI) incentive scheme which will boost local manufacturing of mobile phones and semiconductors. The PLI would offer a benefit of 4-6 percent to large contract manufacturers and domestic companies on the incremental sale of locally manufactured devices over the next five years. The plan is considered to be effective from August this year.
The incentive will be available for devices billed above Rs 14,000 ex-factory. Manufacturers such as Apple (iPhone), Foxconn, Flex, and Wistron (contractors), and Samsung (Note series, Galaxy S) Oppo, Vivo will be the major beneficiaries of the scheme while local phone manufacturers like Micromax, Karbonn, Lava, and Intex are likely to miss out the benefit as they cater primarily to the budget phone segment.
The scheme has been worked out by the Ministry of Information and Technology in discussion with the Ministry of Finance, Ministry of Commerce and NITI Aayog. Overall, the scheme is aimed at making India a hub electronics and mobile manufacturing at par with China and Vietnam and cut down on imports.
As for the disbursement of the proposed scheme, Rs 4,030 crore has been earmarked to be disseminated in the first year, followed by Rs 6,395 crore in the second, Rs 8,760 crore in third, Rs 11,790 crore in the fourth year and Rs 10,820 crore in the fifth year. The new scheme is expected to create mobile phone and parts production worth Rs 8.2 lakh crore, generate Rs 5.8 lakh crore of exports and 2 lakh new jobs, besides earnings the exchequer Rs 4,782 crore from direct taxes.
While the majority of funds will benefit mobile manufacturing, associated components (surface-mounted technology or SMT, devices for semiconductor, printed circuit boards or PCB, and sensors and micro/nano-electronic components) and ATMP units (assembly, testing, marketing, and packaging), which help build ecosystem for semiconductors, would also be covered.