The IT ministry is working on a policy to roll out Rs 23k crore in incentives into electronics manufacturing as the Production Linked Incentive (PLI) scheme nears its sunset. This ambitious incentive scheme will be spread over six years with an aim to localise production of crucial components such as display modules, sub assembly camera modules, printed circuit board assemblies, lithium cell enclosures, resistors, capacitors, and ferrites, among others.
India has emerged as a smartphone manufacturing hub owing to schemes that have incentivised giants like Apple and Samsung to localise assembly lines. However, the local value addition remains low at 15-20%. The government is keen on raising this to about 30-40%. The scheme to encourage components manufacture is being seen as a crucial next step after the PLI which is set to expire in 2026. Earlier, phone makers had sought a renewal for the scheme saying that a lot more has to be done in the sector yet.
According to reports quoting officials in the IT Ministry, the scheme could offer three different kinds of incentives: depending on operational expenses, capital expenses, and a combination of the two. Both greenfield and brownfield investments would be supported by subsidies. In addition, foreign companies can participate in the scheme by committing to technology transfer to domestic firms or through a tie up with an Indian company.
The official quoted above said that not only will this scheme boost electronic manufacturing but also give a tremendous push to employment creation. According to the source, the government is targeting that the scheme will help generate 91,600 direct jobs over the six-year period, with annual incentive payouts ranging from Rs 2,300 crore to Rs 4,200 crore, conditional on companies meeting investment, production and employment goals for the corresponding year.
During an internal assessment last year, the government had identified a huge demand-supply gap in the electronic components manufacturing sector – $100 billion for domestic consumption alone, and $140 billion if India wants to meet export demand as well.
