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Explained: What is the production linked incentive scheme for electronics manufacturers?

31st July, 2020 Editorial


  • Global electronics giants such as Samsung, Pegatron, Flex, and Foxconn among others are looking to either set shop or expand their presence in India.

About Production Linked Incentive (PLI):

  • The IT ministry had on April 1 notified a scheme, which would give incentives of 4-6 per cent 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.
  • Companies that make mobile phones, which sell for Rs 15,000 or more will get an incentive of up to 6 per cent on incremental sales of all such mobile phones made in India.
  • Companies, which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crores for the next four years.
  • Will be active for five years with financial year (FY) 2019-20 considered as the base year for calculation of incentives.
  • All investments and incremental sales registered after FY20 shall be taken into account while computing the incentive to be given to each company.
  • Incentives during the years:
    • Ist year: 5,334 crores
    • IInd year: 8,064 crores
    • IIIrd year: 8,425 crores
    • 4th year: 11,488 crores
    • 5th year: 7,640 crores

Total: 40,951 crores.

Consideration of components:

  • 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.
  • 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.

Reference: https://indianexpress.com/article/explained/national-policy-on-electronics-production-linked-incentive-scheme-explained-6530777/