Smartphone PLI Tenure May Get Changed to Six Years

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The government of India is considering to take the move in order to create a level playing field for companies who are participating in the smartphone PLI

The Government of India is trying to create a level playing field for smartphone companies who have missed their PLI targets and for the ones who met their targets. A report by Financial Express notes that the base year for both the companies would remain unchanged.

One of the ways towards creating this level playing field might be by the way of extending the tenure of PLI scheme to six years. If done, all the manufacturers will have the option to get their targets calculated from any five years among the six finalised. This simply means that companies might get to choose calculation of their targets from this financial year or the next. Originally, the tenure of the scheme was five years.

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For example, Samsung Electronics, which has met PLI targets for the first year, can claim incentives on the incremental sales over the base year, ie, FY20, while others can do the same for FY21. However, all the manufactuers will need to achieve their incremental sales target based on FY20.

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.

It was reported earlier that ministry of electronics and IT (MeitY) had no plans to allow ‘PLI for smartphone’ applicants to treat year 2021-22 as the first year for production targets.

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.

“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.

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 had 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.”

“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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