The government plans an increase of 42,000 crore in India for mobile phones

NEW DELHI: In one of the largest incentive schemes to boost the national manufacture of mobile phones and their components, the government has developed a production-related incentive package (PLI) of almost Rs 42,000 million for those who manufacture in India , planning to offer a 4-6% profit on incremental sales (of locally manufactured goods) for a period of five years.

Companies that manufacture and sell high-end devices, such as Apple iPhone and Samsung Galaxy S and Note Series, would be the main beneficiaries, as would some local players such as Lava, Karbonn, Micromax and Intex.



The scheme, which will be implemented by the IT ministry and has been prepared in consultation with the ministries of finance and commerce, as well as with it, is intended to make India a center for the manufacture of electronic products and components, so parallel to others manufacturing powers such as China and Vietnam, highly located sources told TOI.

“The electronic hardware manufacturing sector faces the lack of a level playing field against competing nations ... (and) suffers from 8.5% to 11% disability due to lack of adequate infrastructure, chain national supply and logistics; high cost of finance; inadequate availability of quality energy; limited design capabilities and focus on R&dbyindustry; and skills development weaknesses, said a source from the IT ministry, while advocating for reinforcement.

The government plans to offer incentives under the scheme to large contract manufacturers (as defined in the 2017 FDI policy circular) in the sale of phones above the invoice value of $ 200 (slightly more than Rs 14,000 ). Those who will benefit will include manufacturers with global contracts such as Foxconn, Flex and Wistron, all of which manufacture products in India. However, some companies such as Oppo, Vivo and even Samsung are not very happy since the incentive is for devices with a factory price greater than $ 200, and most of the phones sold by them are below this cost.

The other group that will benefit will be national companies, defined as those owned by resident Indian citizens, again as defined in the 2017 FDI policy circular. These include entities such as Karbonn, Lava and Micromax, which are currently struggling but may Benefit from reinforcement. A company is considered 'owned' by resident Indian citizens if more than 50% of the capital in it is owned by resident Indian citizens and/or Indian companies, which are ultimately owned and controlled by resident Indian citizens, an official said .

The government wants to reduce the growing invoice of imports of electronic products. He hopes that the incentives through the scheme will help create an incremental production of Rs 8.2 lakh crore of mobile phones and their parts, generate Rs 5.8 lakh crore, while creating 2 lakh of new jobs and contributing Rs 4,782 crore to the treasury through direct tax revenue. .

“The total cost of the scheme is planned at Rs 41,795 million rupees and will be initially available for the approval of new applications for a period of three months. This will be a centrally sponsored package and will not overlap with any existing scheme in the manufacture of electronic products, said one of the sources, adding: India will be well positioned as a global center for the design and manufacture of electronic systems (ESDM)) due to integration with global value chains, becoming a destination for mobile phone exports.

Under the plan, the scheme will extend an incentive from 4% to 6% on incremental sales achieved in 2019-20, which would act as the base year. While most of the funds would be disbursed for the manufacture of mobile phones, it will also cover the manufacture of specific electronic components and also ATMP units (assembly, testing, marketing and packaging) that are considered a precursor to establish an ecosystem for semiconductors. Covers will include SMT (surface mount technology), semiconductor devices, PCB (printed circuit boards) and sensors and micro/nanoelectronic components.

The official note said that the package was necessary considering the imminent withdrawal of the Merchandise Export Scheme of India (MEIS) and the limited relief provided under the proposed Export Tax or Export Product Tax (RoDTEP) scheme. A high-level committee, chaired by CEO Niti Aayog and composed of secretaries of the Department of Economic Affairs, the Department of Internal Trade and IT has recommended focusing on mobile manufacturing.

The total incentive planned for the first year is around Rs 4,030 million rupees, in the second Rs 6,395 million rupees, in the third Rs 8,760 million rupees, in the fourth Rs 11,790 million rupees and in the fifth Rs 10,820 Rs million Since the demand for electronic hardware is expected to increase rapidly to approximately $ 400 billion (approximately Rs 26 lakh crore) by 2025, India cannot afford to support the rapid increase in currency outflows due to imports of electronic products, said the IT ministry.

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