Govt Considering Making FY22 Base Year For Mobile PLI: Report

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It was reported earlier that MeitY had no plans to allow ‘PLI for smartphone’ applicants to treat year 2021-22 as the first year for production targets

The government of India and Ministry of Electronics and IT (MeitY) is considering to make financial year 2022 as the base year for production linked scheme (PLI) around smartphones in India. Earlier, the base year was FY 2021.

A report by the Economic Times quoted a government official saying that with the second wave of Covid 19 hitting the country, there is some consideration going on to make FY22 as the base year of PLI around mobile manufacturing.

If the change takes place, mobile manufacturers will have to treat FY22 as base year and post incremental sales worth Rs 4,000 crores this year. The incremental sales for second year of the PLI was fixed at Rs 8,000 crores. It is worth mentioning here that Samsung was the only company to have met targets for the PLI Scheme.

It was reported earlier that MeitY had no plans to allow ‘PLI for smartphone’ applicants to treat year 2021-22 as the first year for production targets. The first year for these targets has originally been set as the 2020-21 period.

“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,” ET had quoted a govt official.

If approved now, companies including Foxconn, Wistron, Optiemus, Dixon, Lava, Bhagwati, UTL, Sahasra, AT&S and Neolync will be able to enjoy a lot of relief.

Rs 1,300 Crore In December 2020 Quarter

Under this PLI scheme for large scale electronics manufacturing, mobile manufacturers produced goods worth Rs 35,000 crore and invested Rs 1,300 crore in the December 2020 quarter, notified the Ministry of Commerce and Industry in an official statement.

India Cellular & Electronic Association (ICEA), in a letter addressing the government, has requested that FY 2020-21 be considered as a year for preparation, keeping in mind the disruptions in production and business caused by the ongoing pandemic.

“Incentives should start from the financial year FY 2021-22 and end in the year FY 2025-26 instead of FY 2024-25, with no other change in the Scheme, keeping the yearly expenditure envelope unchanged,” the body said in a letter.

Citing reasons like the lockdown in the country, shortage of chipsets, lack of time to increase capacity, lack of technical specialists for the inability of companies to meet the given targets, the ICEA said, “Any company that has achieved both investment and revenue targets during the current financial year due to their ability to exploit existing facilities, production lines, or having been established in India for a long time, should be given the incentives as per the current scheme.”

Earlier, several handset manufacturing companies had urged the government to shift the timeline of the production-linked incentive (PLI) scheme and roll over the targets of this year and combine them with those of the next financial year.

“In case of a force majeure event, the empowered committee may amend, modify and withdraw any clauses under the scheme,” reads section 8.8 and 8.9 of the guidelines for operation of the PLI scheme.

The final decision will be taken by a committee that comprises the secretaries of various departments falling under the aegis of the government of India. Some of these include departments of revenue, expenditure, economic affairs, promotion of industry and internal trade and MeitY. The Director-General of Foreign Trade and the chief executive of the Niti Aayog are also a part of this committee.

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