Modi government’s relentless pursuit to make India a global manufacturing hub seems to be paying off finally. The Production Linked Incentive (PLI) scheme, launched by the Modi government in April, to attract investments in electronics manufacturing has received a positive response from top smartphone manufacturers. Interestingly, the list of applicants doesn’t have any Chinese names.
Big names like South Korea’s Samsung and Apple’s Taiwanese contract manufacturers- Foxconn, Wistron, and Pegatron have applied for the 6.6 billion US dollar scheme to boost the domestic manufacturing of electronics. The Modi government’s scheme offers cash incentives to the applicant companies on additional sales of devices manufactured over five years, starting with the base year 2019-20.
According to Ravi Shankar Prasad, Union Minister of Electronics and Information Technology, the PLI scheme has received a healthy response. Prasad tweeted, “A total of 22 companies have filed their application under the PLI Scheme. These companies will produce mobile phones and components worth Rs 11.5 lakh crore (153 billion US dollars) in the coming 5 years out of which products worth Rs 7 lakh crore will be exported.”
A total of 22 companies have filed their application under the PLI Scheme. These companies will produce mobile phones and components worth Rs 11.5 lakh crore in the coming 5 years out of which products worth Rs 7 lakh crore will be exported. pic.twitter.com/3yUky3HkOC
— Ravi Shankar Prasad (Modi ka Parivar) (@rsprasad) August 1, 2020
This Modi government’s PLI scheme is India’s giant leap to become a major smartphone manufacturer which aligns well with its aim to be a global manufacturing hub in the coming years. It is slated to create more than a million jobs in India, of which 3, 00,000 will be created directly and an additional 9,00,000 will be created indirectly.
The notable absence of Chinese manufacturers- OnePlus, Vivo, Oppo and Realme further express how China is being kicked out of the supply chains. Prasad said that the rules regarding investment and security were clearly defined concerning the neighbouring countries. Without naming any country, the Modi government minister said that the rules on security and investment will have to be complied with.
The entry in the Indian smartphone manufacturing industry is a huge boon for Apple and Samsung. With over one billion wireless subscribers and more than 350 million users still reliant on basic phones, India offers a huge market to tap in. A rapidly rising middle class further creates ample space for smartphone manufacturers.
Apple is considering moving 20 per cent of its production capacity out of China. And it couldn’t have found a better opportunity than the PLI scheme. This could lead to the Silicon Valley Company’s contract manufacturers engaging their presence in India.
Apple assembles some of its instruments, including iPhone 11, through Foxconn and Wistron’s local unit in two states. However, Pegatron- one of Apple’s leading suppliers hasn’t yet established a single plant in India. But according to NDTV, sources have said that Pegatron is in talks with several states to set up a manufacturing facility in India.
The other smartphone giant, Samsung, already operates what it calls the biggest smartphone manufacturing plant on the outskirts of Delhi, and by applying for the Modi government’s PLI scheme it wants to further enhance its footprint in smartphone manufacturing in India.
Domestic manufacturers too have evinced interest in the Modi government’s PLI scheme. Lava, Dixon, Micromax, Sojo, Optimus and Padget Electronics have filed applications for the incentives scheme.
With this move, Prime Minister Modi has inched a step closer to realising the ambitions of making India a leading smartphone manufacturer. It all started last year in December when Prime Minister Narendra Modi met senior executives of Apple, Samsung, and domestic handset company Lava. Since then, India has been attempting to build a robust domestic manufacturing sector in smartphones through a slew of major and sweeping policy changes.
With China’s receding influence as the “world’s factory”, India is making every possible move to overcome Chinese hegemony in every single sector. As such, New Delhi seems to have drawn first blood by making deep inroads in Smartphone manufacturing.