The Indian government is planning to make India a manufacturing base of mobile phones and for this, it is going to provide sops to Mobile Phone Manufactures including financial incentives and other ready to use facilities. Initially, the government has prepared a package of Rs 50,000 crore and aims to attract five big suppliers and five domestic companies to expand mobile phone manufacturing in India.
According to the Ministry of Electronics and Information Technology (MeitY), with 2019-20 as the base year, 40,000 crores would be offered as production linked cash incentive of 4 to 6 per cent on incremental sales of mobile phones and related parts made in India for a period of five years.
Under the Scheme for Promotion of Manufacturing of Components and Semiconductors (SPECS), the government would reimburse 25 per cent of capital expenditure for companies producing electronic parts, semiconductors and other components. The scheme would help to promote local manufacturing of mobile components and reduce the need for importing electronic parts.
Also, companies will be provided with electronic manufacturing clusters with ready-to-use facilities. Xiaomi India’s Chief Operating Officer, Muralikrishnan B. said that the SPECS Scheme will help to overcome the disabilities of manufacturing electronic components in India.
Electronics and IT minister, Ravi Shankar Prasad said that the government’s decision can potentially turn India into a global hub for mobile phone production and make it the largest exported item out of the country while generating half a million jobs.
The schemes were approved on March and the government started receiving an application from Tuesday. Indian Cellular and Electronics Association’s Chairman Pankaj Mohindroo said, “The PLI (production-linked incentive) instituted on mobile phones is indeed the first-ever scheme announced by the government in the post-independence period, whereby, similar PLI is extended for both domestic Indian champions and global supply”.
The government will offer infrastructure support such as ready-built factory sheds and plug-and-play facilities to companies under modified electronics manufacturing cluster scheme (EMC 2.0). The scheme would help attract both global mobile phone manufacturers and their supply chains.
According to data from the Ministry for Electronics and IT, the production of mobile handsets in 2018-19 has reached to Rs 1.7 trillion worth of 290 million units which in the year 2014 was just Rs 19,000 crore worth of 60 million units. In a period of 6 years, from the year 2012 to the year 2018, India’s share in the global electronics market grew by 1.7 per cent from 1.3 per cent to 3 per cent.
Panasonic India’s President Manish Sharma said, “At the moment, the electronics industry is one of the fastest-growing sectors; it’s expected to reach $400 billion by 2025 with potential import opportunity of $150 billion, which can be leveraged locally”.
Government’s sops to mobile phone manufacturing companies are part of government’s strategy to woo foreign investment in India from the Companies planning to diversify their production bases beyond China after COVID Pandemic Outbreak in China disrupted Supply Chains. Many U.S Companies including Apple are also under pressure from the U.S administration to shift their manufacturing unit out of China due to political reasons arising from COVID Outbreak and ongoing trade war of U.S with China.