Mobile phone manufacturers seek timelines of PLI scheme

Mobile phone manufactures have approached the government to roll over timelines of the production linked incentive (PLI) scheme, as they are likely to miss the production target of the current financial year. The companies include iPhone maker Apple’s contract manufacturers Foxconn Hon Hai, Wistron and Pegatron, Samsung and Rising Star.

The Indian Cellular and Electronics Association (ICEA) had written to the Electronics and IT Secretary Ajay Prakash Sawhney, on December 24, that there will be a shortfall in targets under the PLI scheme due to shortage of chips coupled with supply constraints posed by the COVID-19 pandemic.

Pankaj Mohindroo, ICEA chairman, said the PLI applicants are working furiously and with everything possible at their command to fufil the targets. “Many of them will be able to complete it but not before early financial year (FY)2021-22, and a handful will even be able to complete by March 2021,” he said. “However, they are skating on thin ice because there could be many slips in these extraordinary circumstances.”

Mobile devices industry body brought to the fore that operations of several companies were hit four months before the PLI scheme started due to international flight ban, along with other logistics issue and the applicants got very little time to negotiate, select, order, procure and install all the machinery, and equipment after they were given scheme qualification letter on October 7.

As such, the ICEA requested the government to adjust timelines for incentive under the PLI scheme without compromising on the five year target set under it. It has proposed to reward companies who meet their target during the current fiscal and give PLI on incremental production to companies that meet investment targets and base production irrespective of whether they have met the incremental turnover target for FY2020-21.

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Mohindroo said shortfall for FY2020-21, if any, may be added to the incremental targets to the annual incremental targets in any one out of the subsequent two years at the choice of the applicant. “If a company achieves only Rs 2,000 crore incremental target for current fiscal against Rs 4,000, then the company should be paid six per cent on Rs 2,000 crore and it should be allowed to add the balance 2,000 crore in FY22 or FY23 for incentives,” he explained. “This will ensure that the production targets over the five year period are not reduced. Therefore, the spirit of the PLI remains intact.”

The government, in October, had cleared 16 proposals from domestic and international companies entailing investment of Rs 11,000 crore under the PLI scheme to manufacture mobile phones worth Rs 10.5 lakh crore over the next five years.