As the smartphone production-linked incentive (PLI) scheme emerges as one of the India’s most successful policies, the industry is advocating for another round of the scheme to achieve greater scale and sustain its momentum.
“PLI 1.0 has achieved a large part of its objective, but the work is not done yet. There is still time to consolidate the gains we have made. That’s why we’re requesting another round of PLI,” Sunil Vachani, chairman of Dixon Technologies and outgoing president of the Consumer Electronics & Appliances Manufacturers Association (CEAMA), told FE.
Comments from Vachani assume significance as the smartphone PLI scheme will end in 2026 and the government is also exploring options to extend the scheme.
The smartphone PLI has seen domestic production of phones rising to Rs 4.1 lakh crore in FY24 from Rs 2.14 lakh crore in FY20, the year before the scheme was announced. Smartphones exports from the country rose to Rs 1.2 lakh crore in FY24, compared to Rs 27,225 crore in FY20.
“With another round of smartphone PLI, a components scheme will come in, design capabilities will expand, and scale will follow. After that, no subsidies would be required,” he said.
The government is already working on a components incentive scheme to increase domestic value addition in electronics manufacturing, aligning with its ambitious target of achieving $500 billion in electronics manufacturing by 2030.
“With the current growth levels, I understand the target looks difficult. But the point is we are in a different world. When the new president takes over in the US lots of things can happen. Post the results announcements in the US, a lot of companies are certainly rushing to India and talking about creating an alternative,” Vachani said.
“A large part of the $500 billion should come from exports. Once the big companies start sourcing from India, things could change dramatically,” he added.
Areas where the government needs to provide support are: giving land to companies at subsidised and affordable rates, offering plug and play facility to companies who cannot invest much, reduction in tariffs, and focus on ease of doing business.
Currently, domestic value addition in electronics manufacturing stands at 15-18%. The government aims to raise this to 35-40% initially, with a long-term target of 50%.
The appliances and consumer electronics industry has also called for a second round of PLI for high-value components such as compressors and motors. The industry emphasized the need for rationalising taxes and tariffs on imports to boost competitiveness.
