The Indian government is encouraging international electronics companies to manufacture their products in the country by introducing new schemes. The Ministry of Electronics has announced an incentive of about ₹50,000 crores ($6.6 billion).
The government has introduced three new schemes and they are as listed below.
- Production Linked Incentive (PLI)
- Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
- Modified Electronics Manufacturing Clusters (EMC 2.0)
The most interesting out of three is Production Linked Incentive (PLI) scheme. The Ministry of Electronics has removed certain clauses, which were previously opposed by the companies.
The new updated scheme now states that companies can enforce force majeure in unfortunate times like the ongoing pandemic. Also, incentives ranging between 4% to 6% over a period of 5 years have also been introduced.
Smartphone companies interested in this scheme must manufacture high-end phones (above $200) worth ₹4,000 crores in the first year followed by ₹8,000 crores, ₹15,000 crores, ₹20,000 crores, and ₹25,000 crores in the next four years to be eligible for the incentives.
Whereas, SPECS, on the other hand, will grant an incentive of 25% on capital expenditure for electronic goods like semiconductor/ display fabrication units, Assembly, Test, Marking, and Packaging (ATMP) units, and others.
Lastly, EMC 2.0 will provide support for building world-class infrastructure with common facilities and amenities like Ready Built Factory (RBF) sheds / Plug and Play facilities.
With companies looking to shift their production base out of China, India could turn out to be a favorable region for smartphone manufacturers in the coming years. Apple, Xiaomi, and others already manufacture smartphones sold in India but such incentives are meant to attract more investment from manufacturers, with the possibility of positioning India as a global smartphone export hub.
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