Kamal Ghorui
The Indian government is reportedly preparing a major overhaul of its flagship smartphone manufacturing incentive programme. The ‘revamped’ flagship Production-Linked Incentive (PLI) scheme for smartphones will tie government subsidies to exports and the use of locally produced components for the first time, as per a report by Bloomberg. The move is likely to benefit Apple, Samsung and their suppliers.Citing people familiar with the matter, the report claimed that the new plan marks a departure from the existing model, which focused primarily on boosting domestic production volumes, and that the revamped scheme programme will replace the current version of which expires on March 31. The exact policy design, size of incentives, and total budget are still being finalised and could change during inter-ministerial consultations, the report said.
What is changing and why
Under the original PLI scheme, with nearly every smartphone sold in India now assembled locally, government officials believe the programme has largely fulfilled its initial goal of meeting domestic demand, the report said, citing its sources.The focus is now shifting: moving India up the manufacturing value chain, beyond what officials have described as “screwdriver assembly” – the process of putting together components that are made elsewhere. Under the new proposal, companies will be rewarded not just for how much they produce, but for how much they export and how much of the device is made in India. Furthermore, incentives are expected to be tiered: Manufacturers will receive higher subsidies if the local content goes into each device. Components such as camera modules, display assemblies and other sub-parts sourced from Indian suppliers could qualify for additional benefits. Moreover, electronic devices that meet the highest localisation thresholds and are shipped overseas could receive the maximum subsidy available.
Revamped PLI programme to benefit Samsung and Apple
The iPhone maker’s contract manufacturers – primarily Foxconn and Tata Electronics – already account for roughly three-quarters of India’s total smartphone exports, making Apple the single biggest driver of India’s emergence as a global handset export hub. Reportedly, Apple also targets to ship the majority of US-bound iPhones from India by the end of this year, a goal that would further cement India’s position as the top source of smartphones sold in the American market.Samsung is also a significant beneficiary of the existing PLI programme and is expected to feature prominently in the new one.Furthermore, the government is also using the revamped scheme as a lever to push Chinese smartphone brands, including Oppo, Vivo and Xiaomi, to do more than just manufacture for the Indian domestic market.
