India’s ambitious Production Linked Incentive (PLI) scheme for mobile-phone manufacturing—launched with much fanfare in 2020—is failing to live up to one of its key promises. Three years on, domestic manufacturers are struggling to keep up with foreign competitors despite being given more lenient targets.
Only six of the 10 (five Indian and five global) firms approved for the programme in October 2020 have been able to claim incentives.
Among those, four are international corporations manufacturing in India: Samsung, Foxconn (Hon Hai Precision Industry), Wistron Infocomm Manufacturing, and Pegatron.
And only two—Dixon Technologies and United Telelinks Neolyncs (UTNPL)—of five domestic firms that received approval under the scheme are expected to receive incentives.
The scheme extends a 4-6% cash benefit on incremental sales of electronics goods manufactured in the country to eligible companies for five years, with 2019-2020 as the base year. And it has much riding on it. The scheme with an outlay of Rs 38,600 crore ($4.7 billion) is expected to boost mobile-phone exports at scale.
On 4 March, Rajeev Chandrasekhar, the minister of state for electronics and information technology (MeitY), said said The Print ‘Mobile phones will be among top 10 exports from India from 2024,’ says MoS Rajeev Chandrasekhar Read more the government aims to position mobile phones among India’s top 10 exports by 2024. The minister has also stated stated Business Insider Electronics export from India to cross ₹1.28 lakh crore next fiscal: MoS IT Read more that the government expects the country to export ~$12 billion worth of phones by next year. It would be a significant leap from mobile-phone exports worth ~$5.5 billion in the year ended March 2022.
What remains unsaid is that the lion’s share of India’s mobile-phone exports has come from contract manufacturers of global giants Samsung and Apple. The scheme—combined with tax incentives and a favourable geopolitical environment—attracted many international manufacturers such as Wistron and Foxconn to the country. Industry insiders estimate their contribution to be as high as 70-80% of the total exports.
That leaves domestic manufacturing companies such as Lava International, Padget Electronics (Dixon Tech), and Bhagwati Products with a minuscule share. For instance, Dixon has exported a paltry Rs 657 crore (~$79 million) worth of mobile phones in the year ended March 2022. But that is still a respectable figure, given that others didn’t even come close.
Lava International, another Indian electronics company, has also struggled to make inroads, despite expanding its manufacturing facilities in 2021. While it needs fresh funds to utilise those facilities and revive the brand, markets regulator Securities and Exchange Board of India (Sebi) returned its initial public offering (IPO) prospectus in January—pushing back the company’s plans for a Rs 1,500 crore ($181 million) public offer.
