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As a part of the National Policy on Electronics, the IT ministry had notified a scheme which would give incentives of 4-6% to electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.
The domestic electronics hardware manufacturing sector faces a lack of a level playing field vis-à-vis competing nations. The sector suffers a disability of around 8.5% to 11% on account of:
. lack of adequate infrastructure
. domestic supply chain and logistics
. high cost of finance
. inadequate availability of quality power
. limited design capabilities and focus on R&D by the industry
. inadequacies in skill development
Features of Production Linked Incentive Scheme
- Companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6% on incremental sales of all such mobile phones made in India.
- In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.
- The scheme will on one hand attract big foreign investment in the sector, while also encouraging domestic mobile phone makers to expand their units and presence in India.
- The PLI scheme will be active for five years with the financial year (FY) 2019-20 considered as the base year for calculation of incentives.
- The total incentives over five years has been kept at Rs 40,951 crore.
- All electronic manufacturing companies which are either Indian or have a registered unit in India will be eligible to apply for the scheme.
- These companies can either create a new unit or seek incentives for their existing units from one or more locations in India.
- Any additional expenditure incurred by companies on plant, machinery, equipment, research and development and transfer of technology for manufacture of mobile phones and related electronic items will be eligible for the incentive scheme.
- However, all investment done by companies on land and buildings for the project will not be considered for any incentives or determine eligibility of the scheme.
