Production Linked Incentive Scheme ₹11.5 Lakh Cr Investment

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Global electronics giants such as Samsung, Pegatron, Flex, and Foxconn among others are looking to either set shop or expand their presence in India.
These companies are in final stages of negotiations to benefit from the Ministry of Electronics and Information Technology’s (MeitY) production linked incentive (PLI) scheme for making mobile phones and certain other specified electronic components.

What is PLI scheme?

It would give incentives of 4-6% to electronics companies which manufacture mobile phones and other electronic components such as-
Transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.
According to the scheme, companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6% on incremental sales of all such mobile phones made in India.
In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.
The scheme, according to officials, will on one hand attract big foreign investment in the sector,
While also encouraging domestic mobile phone makers to expand their units and presence in India.

All electronic manufacturing companies which are Indian or have a registered unit in India will be eligible to apply for the scheme.
These companies can either create a new unit or seek incentives for existing units in one or more locations in India.

The PLI scheme will be active for five years.
It will take FY 2019-20 as the base year for calculation of incentives.
How are the incentives calculated and distributed?
The total incentives over five years have been kept at
Rs 40,951 crore.
Total incentive available to distribute for the first year is capped at Rs 5,334 crore.
For the second-year Rs 8,064 have been earmarked, and for the third year incentives are capped at 8,425 crore.
This will is hiked for the fourth year to Rs 11,488 crore.
In the fifth and final year, 7,640 crore is the amount that will be distributed.

All investment done by companies on land and buildings for the project will not be considered for any incentives or determine the eligibility of the scheme.
But, additional expenditure incurred by companies on the plant, machinery, equipment, research, and development and transfer of technology for the manufacture of mobile phones, including related electronic items will be eligible for the incentive scheme.

This scheme will be implemented through a Nodal Agency which will act as a Project Management Agency (PMA).
It will provide secretarial, managerial, and implementation support, as well as carry out any other responsibilities assigned to it by the Ministry of Electronics and Information Technology (MeitY).

Unlike the previous electronics manufacturing schemes, there has been considerable interest in the PLI scheme so far.
According to government officials, South Korean company Samsung Electronics, Taiwan’s Pegatron, and Singapore’s Flex are in the final stages of discussions to either set up new units or expand the existing units to avail benefits under the scheme.
Apart from that, companies such as LG India, which already have manufacturing units in India have also shown interest in the scheme.
In the budget-category phone segment also, companies such as Lava, Dixon, and Karbonn have applied, government officials said.
So far, a total of 22 companies have registered for the PLI scheme.