Breather For Companies as Large Electronics’ PLI Gets Tenure Extension

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A consumer looking at smartphones in Pakistan (Source - TechJuice)

The government noted that investments made in 2020-21 will also be counted. Participating companies will get the option of choosing any five years for meeting their production targets under the scheme

The government of India has extended the tenure of PLI for Large Scale Electronics Manufacturing by a year. Smartphones are pegged as a major category in the scheme. It is to be noted here that multiple industry bodies had requested for the reform in March. Pandemic driven supply shortages and other supply chain constraints were hinted towards as reasons leading the companies failing to meet the targets set by the scheme.

“This decision will enable the nation to become a global electronics manufacturing destination and also sent the right message to the global investors in the pandemic time. It shows that India’s governance is deeply compassionate, realistc, and always standing behind trade and industry,” said Pankaj Mohindroo, Chairman, ICEA.

George Paul, chief executive officer (CEO) of the Manufacturers Association of Information Technology (MAIT) said, “Our competitors are competing nations and we have to be more agile than them to attract manufacturing into India,”

The government noted that investments made in 2020-21 will also be counted. Participating companies will get the option of choosing any five years for meeting their production targets under the scheme.

To claim incentives, global companies need to achieve minimum incremental sales of Rs 4,000 crore in first year, Rs 8,000 crore in second year, Rs 15,000 in third year, Rs 20,000 crore in fourth year and Rs 25,000 crore in fifth year. For India based companies, these incremental sales targets are fixed at Rs 500 crore in first year, Rs 1,000 crore in second year, Rs 2,000 crore in third year, Rs 3,500 crore in fourth year and Rs 5,000 crore in fifth year.

“Either all the companies seek a deferment of the entire policy implementation by one year or all of them consider 2020-21 as the first year. We cannot give incentive to one company and defer it for the others,” a government official had said earlier.

Samsung Electronics is the only company that surpassed the investment and output target set under the production-licked incentive (PLI) scheme for the handset and other manufacturing components this year. This could have meant that other handset and component manufacturers like Foxconn, Wistron, Optiemus, Dixon, Lava, Bhagwati, UTL, Sahasra, AT&S and Neolync will not receive any incentive from the Rs 5,334 crore budget earmarked for this financial year. A final call on the matter, however, is yet to be taken.

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