Global electronic giants seek to ramp up India play

As many as six global electronics equipment manufacturers, including Samsung Electronics and Taiwan’s Pegatron, are in final stages of discussion with the Ministry of Electronics and Information Technology (MeitY) to either set up units or expand their present ones in India under a special window that expires in three days. These companies had approached the MeitY to avail benefits under the government’s Production-Linked Incentive (PLI) scheme, notified in April, senior government officials said.

“The talks are in final stages. Most of these deals will for now be in the sub $1-billion (roughly Rs 7,500 crore) range for now. More applications could come in before July 31,” an official said.

Among the other global electronic manufacturing companies, Singapore-based Flextronics, now re-christened as Flex, has also approached the government to avail benefits under the PLI scheme by expanding its Chennai unit, the sources said. The company currently has 10 other units in India, in addition to the one in Chennai.

Detailed questionnaires sent to Samsung, Pegatron, and Flex on the nature and quantum of investment did not elicit any response.

The government had earlier this year in April notified the new PLI scheme, under which companies which set up new mobile and specified equipment manufacturing units or expanded their present units would get incentives of 4 to 6 per cent on incremental sales from good made in India.

The scheme, open for a total of five years, aims to give out incentives worth Rs 5,334 crore in total in the first year, to be divided among all the successful applicants. The total incentive to be given to each company will be decided by an empowered committee, which will have secretaries from the Department of Economic Affairs, Department of Expenditure, Department of Revenue, Department for Promotion of Industry and Internal Trade, Directorate General of Foreign Trade, apart from the MeitY secretary and the chief executive officer of the Niti Aayog.

Apart from new entrants looking to expand their presence in India, existing companies such as LG India, which has a mobile manufacturing unit in Noida, is looking to expand its unit and has applied under the scheme, officials said. “You have Apple’s Foxconn, which is making the latest models from its Chennai plant. In the budget-category phone segment also, Lava, Dixon and Karbonn have applied. We are reviewing their plans,” the official quoted above said.

Under the PLI scheme, for companies making mobile phones which sell for Rs 15,000 or above, the incentive for first year has been kept at 6 per cent of their incremental sales, while for companies which are owned by Indian nationals, the total incentive over four years would be capped at Rs 200 crore. The PLI scheme also envisages incentives for manufacturing some electronic equipment such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems among others. The expenditure on PLI scheme over the next five years is expected to be around Rs 41,000 crore, according to officials.

The government’s initial plans to make India a hub for high-end large electronics equipment and semiconductor units hit a roadblock after most global companies opted to assemble in India rather than set up manufacturing units.

The Economic Survey 2019-20 noted this and observed India should follow the Chinese model of becoming an assembling hub for the world for ‘network products’ such as computers, electronics, and road vehicles to raise its share in the world export market.-The Indian Express

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