Indian Ministry Approves Samsung and Apple Under The PLI Scheme
India’s government is boosting domestic manufacturing under the “Made in India” initiative. The government is encouraging foreign companies to build their manufacturing facilities here in the country. On Tuesday, the Ministry of Electronics and Information and Technology (MeitY) said in a press release that it has approved 16 applicants under the PLI (Production Linked Incentive) Scheme.
Samsung and Apple’s three manufacturing contractors are among the 16 firms that have won USD 6.65 Billion incentives under the PLI scheme to boost their production for a period of over five years. Shri Ravi Shankar Prasad, Union Minister for Electronics & IT, Communication, Law and Justice, said in a press release that in the return of additional sales of goods, the Indian government will return an incentive between 4% and 6% to the eligible companies. He also added that these companies will be producing mobile phones and electronic components worth USD 143 Billion over the next five years.
The participation of Apple’s three partners Foxconn, Wistron, and Pegatron in the scheme expresses the company’s plans to expand its manufacturing base and market share in the country. Earlier this year, Apple had started to assemble its current generation of iPhone in a plant near Chennai, India. Currently, Chinese smartphone manufacturers Vivo, Oppo, OnePlus, and Realme accounts for 80% of the Indian market share. The afore-mentioned Chinese companies had not applied for the program.
According to an Economic Times report, Samsung is set to begin the manufacturing of TV sets from December 2020. However, the company needs permission to import TV sets until they set up its manufacturing plant in Chennai. “As we are setting up the TV manufacturing plant by December 2020, we request for smooth operations and business continuity,” Samsung said in a letter to Ravi Shankar Prasad.
Apple and Samsung account for 60% of the global sales of mobile phones and this scheme is expected to increase the manufacturing of these behemoths in India. In addition to these foreign companies, Indian mobile phone companies including Lava, Micromax, Padget Electronics, Bhagwati, and UTL Neolyncs and Optiemus Electronics are also approved under the PLI scheme. The latest scheme by the government is also accelerating Prime Minister Narendra Modi’s clarion call of AtmaNirbhar Bharat- a self-reliant India.
Indian Ministry said in a statement that “we are optimistic and looking forward to building a strong ecosystem across the value chain and integrating with the global value chains, thereby strengthening electronics manufacturing ecosystem in the country.” It added that the companies approved will create more than 200,000 job opportunities while also creating indirect employment opportunities of “nearly three times.” According to the Indian Ministry, this scheme will improve the domestic value addition from the current 15-20% to 35-40% in the case of mobile phones and 45-50% for electronic components.
In July 2020, the Japanese government said that they would pay companies to move their manufacturing plants out of China. Various companies across the globe are moving their manufacturing plants which are giving India an opportunity to lure foreign companies. To take an advantage of this shift in the global manufacturing arena, India needs to improve its digital manufacturing capabilities. “India needs to look at digital manufacturing and go beyond industry 4.0 – it needs accelerated manufacturing, but needs to create jobs as well,” said Manjeet Kriplani, executive director, Gateway House.