The Indian government has recently removed contentious clauses including evaluation of plants and machinery brought from China and South Korea through its Production Linked Incentive (PLI) Scheme to attract smartphone manufacturers. Apple had been demanding to drop this clause from the Indian government as it was a major constraint for the company to start manufacturing in India.
This recent move by the Indian government will not only benefit Apple but also other Smartphone companies like Samsung, Vivo, OPPO, etc in the local production of their Smartphones in India. The move is a part of the government’s plan to attract massive smartphone manufacturing in India and aims to achieve increased exports by 2025 to over $100 billion.
According to ET, a person aware of the matter said, “The empowered committee of secretaries met on Friday and decided to remove the clause, which evaluated plant and machinery brought into India at 40% of its value, and has agreed to a few other changes so that manufacturing could shift to India in a big way”.
That person has also disclosed the information that the Indian government is initiating talks with the contract manufacturer of Apple, Pegatron to shift its manufacturing unit to India. PLI Scheme has already encouraged Apple’s other contract manufacturers Wistron and Foxconn to shift their production unit to India. US Companies are already under pressure of the American government to shift out of China and India sensing the advantage coming from this situation has begun wooing companies to shift to India by providing them various kinds of incentives and resolving long-standing legal problems to ease the process.
According to new changes proposed to be introduced, the Industry stakeholders will have to be included in the discussion prior to making changes into the PLI Scheme. Government to dilute the need for seeking excessive business information from the proposed investors. The person said various caps have been removed and the government will provide incentive despite the industry meeting its targets provided the government has money for it. With this, a clause has also been added which will allow companies to seek relief from targets in times of natural calamities like the current Pandemic Situation.
The person mentioned by ET has said that the government can make changes to benefits provided based on a company’s performance with respect to its achievement of business targets. The companies scaling up their manufacturing process in India to the minimum desired level set by the government and above will get incentives from the government accordingly. The scheme will benefit both the domestic and foreign manufactures for the next 5 years after the announcement of the scheme which is likely to be on next week. To provide incentives to the companies achieving production and minimum incentive targets, the government has decided a Package of worth Rs 40,951 crore.