In this article, we will talk about the Product Linked Incentive 1.0 and 2.0 for the large scale electronics manufacturing
Introduction
- This is launched in 2020, to boost the domestic production, attracting foreign investments, and reducing the imports
- This is part of the “Make in India” initiative started by the NDA government which will make
- The initial allocation was rupees 40,951 crores for five year period with incentives of 4% to 6%, which was later reduced to rupees 38,601 crores
Eligibility
- Mobile phones with an invoice value above rupees 15,000
- Domestic companies producing low value phones and electronic components like sensors, printed circuit boards
Initial reactions and successes
- This has attracted the investments from
- Foreign players like Apple via Foxconn, Wistron and Pegatron
- Domestic players like Lava and Dixon
- Investments worth rupees 13,000 crores came in from the companies and created employment to around 2,00,000 people
- Growth in the exports of the assembled phones crossed $10 billion
- Government generated 19X revenue of approximately net revenue of rupees 1.04 lakh crores with an investment of rupees 5,800 crores which got disbursed to the companies
- The revenue came from mobile parts duty of rupees 48,000 crores and other from incremental goods and services tax (GST) of rupees 62,000 crores
Current Trends
- In May 2023, government has additionally allocated to sub sectors including IT hardware and wearables with an investment of rupees 17,000 crore
- Tata is making JV’s with Wistron and Pegatron
Challenges
- Firstly the smartphones that are made in India is only getting assembled, but not the manufacturing
- Even though the exports have increased, there is lot of import dependency on the raw materials that are getting
- Disbursements from the government gets delayed due to various reasons
Future
- The target that set for 2030 is $500 billion for the production target
- Since the target has to be achieved, more people with relevant skills has to be present. So skill development also plays key role
- Increasing incentives for manufacturers can also increase the set targets