Under the government’s production-linked incentives (PLI) for large-scale production of electronics, Wistron InfoComm, the Indian unit of one of the top iPhone contract makers in the world, has become the largest investor, raising Rs 1,250 crore. With investments of Rs 900 crore and Rs 650 crore respectively, the local subsidiaries of Samsung and Foxconn came after Wistron. The scheme was introduced by the government in March 2020 to boost production and create jobs. It has enabled a process to grant visas to foreigners working for Indian companies as part of the strategy to increase investment. A monitoring group has also been formed to find faster solutions to the problems facing the sector. A total of Rs 4,200 crore was invested under the scheme. According to data from the Department of Electronics and IT, the program has produced electronic goods worth about $1.67 trillion and nearly 29,000 jobs, while aiming for $10 trillion worth of production and 180,000 jobs.
The PLI scheme was extended by the Center until FY26 in response to pandemic-related disruptions and a severe global chip shortage. As a result, companies can still choose five consecutive years between FY21 and FY26 to meet the benchmark incremental sales targets, with FY20 being considered the base year.
According to an ICRA report, although the country’s manufacturing increased significantly, the amount of value added remained low as an inadequate component manufacturing environment still forces about 80-90 percent of components to be produced outside the country. The main problems facing the companies are a lack of R&D infrastructure, high capital and logistics costs, subdued private sector interest and weak backward links. However, analysts predicted that the 5G rollout, which is expected to increase demand for new phones, could lead to much more investment and production under the plan.
Pankaj Mohindroo, president of the India Cellular and Electronics Association (ICEA), told Mint that the smartphone PLI is a prime example of extensive research and collaboration between businesses and all levels of government. “In addition, it had the natural advantage of the tailwind of a production program put in place in four to five years, the development of the industry and most of the domestic demand is supplied by local production. A very important result of the expansion of production under PLI is substantial exports,” he added.
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