The extension of production-linked incentive (PLI) scheme by one year for mobile phones and electronic components is a big relief for majority of the approved applicants as the manufacturing activity was impacted and there were delays in setting up new manufacturing facilities in the past year due to Covid, said industry analysts and veterans.

The Finance Minister on Monday extended the PLI scheme for large-scale electronics manufacturing with a focus on mobile phones by a year until 2025-26, though the base year of the scheme 2019-20 remains the same.

Companies will now have the option to choose their five-year period either from the base year or the year 2020-21 for calculation of the incentives under the scheme.

Provides flexibility

“The additional one year shall enable the applicants to avail the incentive in a more optimum manner and also provide flexibility for manufacturers who have met current years targets,” Kunal Chaudhary, Tax Partner, EY India, said.

The PLI scheme provides incentive of 6 per cent to 4 per cent on incremental sales of goods under target segments that are manufactured in India, for five years. The incentives were applicable from August 1, 2020 with base year as 2019-20.

The Ministry of Electronics and IT has cleared 16 proposals from domestic and foreign players with an investment of ₹11,000 crore under the PLI scheme to manufacture mobile phones worth ₹10.5-lakh crore over the next five years. The companies include Foxconn Hon Hai, Wistron, Pegatron, Samsung, Rising Star, Lava, Bhagwati (Micromax), Padget Electronics (Dixon Technologies), UTL Neolyncs and Optiemus.

The FM said investments made in 2020-21 will continue to be counted as eligible investments.

“For those who have made investments even in 2020-21 they will also get counted because we have given them the option of choosing any five years for meeting their production target under the scheme,” Nirmala Sitharaman said while announcing new measures to help revive the Covid-hit economy.

According to Pankaj Mohindroo, Chairman, India Cellular and Electronics Association, this extension would not only support the government’s efforts to establish India as an integral part of the Global Value Chain (GVC) in the electronics sector, it will also support developing Indian companies to tap the global and Indian markets through this sharply targeted production incentivisation scheme.

“It is a great win for India. This decision will enable the nation to become a global electronics manufacturing destination and also send the right message to global investors in the pandemic time. It shows that India’s governance is deeply compassionate, realistic and always standing behind trade and industry,” he said.

“The government’s move to extend the tenure of the PLI scheme is welcome step in view of some of the problems faced due to the pandemic,” A Gururaj, Managing Director, Optiemus Electronics, said.

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