Government Working on Rs 42,000 Crore Booster For Local Manufacturers: Report

  • High-end brands like Apple and Samsung might benefit the most
  • The scheme might also benefit domestic manufacturers as it will remove their dependency from China
  • The scheme is applicable to gadgets with invoice value of $200 thereby excluding Oppo and Vivo

In order to ramp up production and boost the local manufacturing market of mobile phones under the flagship scheme of Make In India campaign, the government is working on production-linked incentive scheme of Rs.42,000 crore. This scheme is expected to benefit high end mobile manufacturers and domestic makers the most according to a report by the Times Of India.

Due to the coronavirus outbreak, China is struggling to cope up with the rising demand on shutting down its operations, thereby making this scheme to integrate India into the global supply chain. According to the report, it has also been revealed that the scheme which has not been announced yet will help the global players like Apple and Samsung. The Indian manufacturers’ dependency on China might also be lowered and boost the local production of mobile phones.

The benefit

The report also quoted a source in the IT ministry saying “The electronics hardware manufacturing sector faces the lack of a level-playing field vis-à-vis competing nations… (and) suffers from a disability of 8.5 per cent to 11% on account of lack of adequate infrastructure, domestic supply chain and logistics; high cost of finance; inadequate availability of quality power; limited design capabilities and focus on R&D by the industry; and inadequacies in skill development.”

Contract manufacturers like Foxconn and Wistron might also be benefitted with this scheme as the companies are already manufacturing in India. Companies like Lava, Micromax which come under this category and other domestic companies owned by Indian residents might also be benefitted the most.

The big deal

The report has also revealed that the scheme will be applicable to devices with invoice value of $200 or more, thus excluding mobile makers like Vivo, Oppo from the scheme. Back in January, a report published in Economic Times quoted what an official from MeitY had said, “MeitY (Ministry of Electronics and Information Technology) is working on a production-linked incentive and there will be certain rigid criteria to avail this incentive. We only want those companies which are going to make India an electronics manufacturing and export hub to be able to use this incentive.”

Mark Mobius, an upcoming markets fund manager in an exclusive interview with the Economic Times has said that manufacturers around the world want to diversify away from China and India can be a good bet.