With India wanting to emerge as one of the manufacturing hubs of the world, the government announced Production Linked Incentive (PLI) Scheme has become a centre of attraction for domestic and foreign mobile phone and electronic parts manufacturers. Let us demystify PLI that has become the talk of the town.
Crux of the Matter
What Is PLI?
The government of India introduced PLI under the National Electronics Policy, 2019 with the aim to boost local production and make India a global mobile manufacturing hub. Under the scheme, electronics manufacturing companies making mobile phones and electronic items like transistors, diodes, thyristors, resistors, capacitors, and nano-electronic parts will be given a 4-6% percent incentive on incremental production each year, justifying the title ‘Production Linked Incentives”.
To execute this scheme a nodal agency will be established and it will work as a Project Management Agency (PMA). The Ministry of Electronics and Information Technology (MeitY) will assign tasks and responsibilities to PMA. Moreover, this scheme will be implemented for 5 years and 2019-20 will be taken as the base year.
Criteria For Incentive
- Any Indian registered electronic company and any foreign company having a registered unit in India can apply.
- A company must be producing mobile phones or electronic items like transistors, diodes, thyristors, resistors, capacitors, and nano-electronic parts.
- Must manufacture it in India.
- The incentive will be only given on additional expenditure on plant, machinery, equipment, research and development, and transfer of technology.
- Maximum 5 domestic companies having consolidated global manufacturing revenue (CGMR) more than ₹100 crores in the base year will be given incentives (given all criteria are met).
- Maximum 5 mobile manufacturing companies, producing mobile phones of the invoice value of ₹15,000 and above, and having CGMR more than ₹10,000 crores in the base year will be given incentives (given all criteria are met).
The government has introduced it with a vision to achieve mobile production worth ₹11.50 lakh crore in five years. It will also create 3 lakhs direct jobs and 3 times more indirect jobs. Additionally, this scheme will help increase the domestic value addition of mobile phones from 15-20% to 35-40%.
If there are 5 applicants in both the mentioned categories, then the government is directly bringing investment worth ₹6,000 crores over a period of 4 years in the domains of research and development, ToT, etc. to strengthen India’s electronic manufacturing ability. If all the sales criteria for incentives are met, then India can expect a rise of at least ₹1.5 lakh crores in mobile manufacturing output.
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