When the Indian government launched in April 2020 its Performance Linked Incentive (PLI) scheme for manufacture of smartphones locally, it was basically entering into an unknown territory. A total of 16 companies, including Apple's three contract manufacturers in India and Samsung, received formal government approvals under the $6.65 billion scheme in October 2020. And in nearly one-and-a-half years later, it can be said that the scheme has paid more than rich dividends.
According to the industry body India Cellular and Electronics Association, exports of mobile phones from India are expected to cross Rs 43,500 crore during the current financial year ending March 31, 2022,
Exports have already jumped about 75% in one year to $5.5 billion (about Rs 42,000 crore) early this month from $3.16 billion (about Rs 24,000 crore) at the end of 2020-21.
"We will very safely cross USD 5.7 billion of exports when we complete this financial year," ICEA chairman Pankaj Mohindroo said in a statement.
The smartphone exports have risen despite the constraints of the pandemic-led loss of workforce, lockdowns and non-availability of chips and semiconductors.
Exports are made to newer markets
The global companies that are part of the PLI scheme are Samsung, Apple contract manufacturers --- Foxconn, Pegatron, Wistron --- and Rising Star, and Indian companies include Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics.
Apple assemblers in India, Foxconn and Wistron, will get the PLI incentives for the first time this year. The third Apple assembler Pegatron is to begin production next month. Samsung, which has its own production facility at Noida, is also one of the big players.
Previously, mobile phones from India were primarily exported to South Asia, Africa and parts of Middle East and Eastern Europe but now companies are targeting some of the most competitive and advanced markets in Europe and developed Asia. "These markets demand the highest levels of quality, and manufacturing units located in India are up to the task," ICEA said.
"Increase in mobile phone exports also marks an important shift in the export basket which is gradually transforming from primary commodities to more value-added, high-end products driven by technology industries," it added.
According to CMR data, in 2021, the top countries that 'Make in India' iPhones were exported to include the UK (27%), Japan (24%), the Netherlands (23%), Germany (7%), Italy (4%), Turkey (4%) and the UAE (2%). Samsung exports from India were to the UAE (47%), Russia (12%), South Africa (7%), Germany (5%), Morocco (4%) and the UK (3%).
The PLI scheme
As per the terms of the PLI scheme are expected to lead to total production of over Rs 10.5 lakh crores, of which nearly 60 per cent has to come from exports accounting for around Rs 6.5 lakh crores.
The PLI scheme is part of Prime Minister Narendra Modi government's Make in India initiative where companies stand to gain between 4% to 6% on additional sales of goods produced locally in the next five years.
Under the Smartphone PLI Scheme, the government has allocated Rs 40,951 crore between 2020-21 and 2025-26, where participating companies are allowed to choose any 5 years out of the 6 years for meeting their production targets.
Besides bringing in additional foreign exchange through exports, the PLI scheme, over the five-year period, is also expected to generate more than 200,000 direct jobs and more than 600,000 indirect employment opportunities.
