The govt will give incentives to only 10 firms initially, of which 5 will be local firms. The production-linked incentive (i.e. PLI) scheme worth around Rs 40,995 crore for mobile phone manufacturing is set to offer an impetus to local firms like Micromax, Karbonn, Intex, Lava, and etc, to regain their hold and also business in the market. The govt will give incentives to only of 10 firms initially, of which 5 will be local firms as well.
According to the officials, the PLI scheme would help local companies to make a comeback in the mobile phone business in the country, whereas also benefitting big players as like Apple and Samsung to increase their production capacity here as well. Over the past couple of the years, local players such as Micromax, Karbonn, Intex, and also Lava have ceded market share to Chinese companies such as Xiaomi, Lava, Oppo, etc. Additionally, the majority of the phones in the sub- Rs 15,000 category that is sold by Chinese companies, a category that was earlier dominated by Indian firms. As per the Counterpoint, around 75% of the mobile phones that are sold in India are under of Rs 15,000. The govt is trying to reverse the Chinese dominance through a ‘designed distortion’ in the PLI scheme.
According to the scheme, international companies will get the incentive on mobile phones that have an invoice value of `15,000 and above, whereas no alike eligibility threshold is so required for domestic companies. Because of the eligibility threshold, global firms will be major beneficiaries as like they are into high-end phones, whereas others like Xiaomi, Itel, Realme, Oppo, and etc, would lose out as those firms primarily cater to the arorund Rs 15,000 segment as well.
The PLI scheme extends an incentive of about 4% to 6% on incremental sales over the base year (2019-2020) of goods manufactured in India and covered under the target segments to eligible companies for a period of five years subsequent to the base year. As per only 5 global firms will be selected initially for the scheme, so many of the Chinese firms are set to lose out while Indian firms will get an option to re-emerge. The govt has also kept investment criteria lower for the domestic companies as well. whereas the international firms need to invest Rs 250 crore initially and about Rs 1,000 crore over four years to get benefits under the scheme as well. “To increase the job creation, component manufacturing needs to be moved too. This will not only spur manufacturing but will make India an export-led global manufacturing hub for mobile phones,” as MAIT told.