Rs 40,995 Crore: GOI’s Production Linked Incentive Scheme For Electronics Manufacturing

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  • The Union Cabinet has approved the Production Incentive Scheme (PLI) for large scale electronics manufacturing
  • The scheme mentions integrating assemble in India for the world into Make in India
  • The domestic production of electronic components is valued at approximately Rs 63,380 crore

In a bid to improve and strengthen the indigenous manufacturing of electronics in India, the government has approved the Production Incentive Scheme (PLI) for large scale electronics manufacturing. The scheme includes incentives for players manufacturing mobile phones in India. It also encompasses specified electronic components including assembly, testing, marking and packaging (ATMP) units.

“We welcome the array of schemes introduced by the Union Cabinet. In this difficult time where the industry is going through a tough phase, the steps taken by the government will help to boost domestic manufacturing and attract large investments in the electronics value chain. We are hopeful that the proposed schemes will aid in creating more job opportunities. This will also put an upward thrust on the economy by bringing in large scale electronics manufacturing to India,” stated Kamal Nandi, president, CEAMA & business head & EVP, Godrej Appliances, on cabinet announcements for the electronics sector.

The India Cellular & Electronics Association (ICEA) last year had pointed out that there were around 268 mobile phone manufacturing units operating in India. Ravi Shankar Prasad, in July 2019, has tweeted that there around 120 mobile phone manufacturing plants were operational in the country.

Value of electronics produced in India, as per GOI, has reached Rs 4,58,006 Crore (USD 70 Billion) in 2018-19 from Rs 1,90,366 Crore (USD 29 Billion) in 2014-15 at a compound annual growth rate (CAGR) of about 25 per cent.

Rs 40,951 crore incentive outlay

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The total cost of the proposed scheme, as informed by the government of India (GOI), is approximately Rs 40,995 crore. This figure includes an incentive outlay of approximately Rs 40,951 crore and administrative expenses of around Rs 44 crore.

“The scheme shall extend an incentive of four to six per cent on incremental sales (over the base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five (5) years subsequent to the base year as defined,” read GOI’s official statement.

Interestingly, India’s import of electronic products has been on a sharp rise since 2011. While the figures were around Rs One trillion in 2011, the same for the year 2019 stood at around Rs Four Trillion. Sourced from Statista, the report mentions that these imports included computer hardware, consumer electronics, electronic components and instruments and telecom instruments.

Benefiting five to six major global players and few domestic champions

The official statement released by the GOI also states that the scheme will benefit five to six major global players and few domestic champions, in the field of mobile manufacturing and specified electronics components. The statement, however, has not disclosed names of these global players and ‘domestic champions’.

“By integrating “Assemble in India for the world” into “Make in India”, India can significantly increase manufacturing output,” read the statement.

It continued, “Due to this the domestic value addition for mobile phones is expected to rise to 35 to 40 per cent by 2025 from the current level of 20 to 25 per cent. Total employment (direct and indirect) potential of the scheme is approximately 8,00,000 jobs.”

According to the Electronic Industries Association of India (ELCINA), the electronic components market in India has increased from Rs 68,342 crore (USD 11 Billion) in 2015-16 to Rs 1,31,832 crore (USD 20.8 Billion) in 2018-19. Domestic production of electronic components is valued at approximately Rs 63, 380 crore (USD 10 Billion), of which around Rs 48,803 crore (USD 7.7 Billion) is domestically consumed.

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