The smartphone production-linked incentive (PLI) scheme has proven to be a significant revenue generator for the Indian government, yielding 19 times the value of its incentive disbursements over the last four fiscal years.
According to the India Cellular and Electronics Association (ICEA), the scheme contributed US$ 13.03 billion (Rs. 1,10,000 crore) to the exchequer and resulted in the production of goods worth US$ 148.71 billion (Rs. 12,55,000 crore) between 2021 and 2024.
During this period, the government allocated US$ 687.3 billion (Rs. 5,800 crore) in incentives, with the total revenue from the scheme amounting to US$ 12.35 billion (Rs. 1,04,200 crore). In addition, the industry paid (Rs. 48,000 crore) in duties on mobile parts and components.
In comparison, GST revenues increased by US$ 5.69 billion (Rs. 62,000 crore) after the government raised the tax rate on mobile phones from 12% to 18% in April 2020, coinciding with the scheme’s launch.
The scheme, which aims to boost production, exports, job creation, and foreign direct investment (FDI), has been largely successful, driven by Apple’s contract manufacturers, including Foxconn, Pegatron, and Wistron, alongside Samsung.
However, only a few Indian companies, like Dixon Technologies, have met the required incentive targets. Since its commencement in FY21, the scheme has created nearly 300,000 direct and 600,000 indirect jobs, becoming the largest job generator, especially for women in mid-skilled, blue-collar roles.
Cumulative smartphone exports during this period reached US$ 34.01 billion (Rs. 2,87,000 crore), propelling India to the position of the third-largest exporter of smartphones by the end of 2023, with the sector now being India’s largest export to the US. Additionally, value addition in India’s smartphone manufacturing has grown from 12% to nearly 20% in recent years.
Smartphones have been a key success story of the government’s production-linked incentive (PLI) scheme, helping India become the second-largest mobile phone manufacturing country, after China. It has also been a key instrument in the China-Plus-One strategy, which is focused on leveraging the geopolitical tensions between that country and the US to woo companies manufacturing in China and persuade them to shift to India.
PLI has been a Game Changer
India’s ambitious Production-Linked Incentive (PLI) scheme, launched in March 2020, has emerged as a game-changer in the country’s manufacturing landscape. With an outlay of ₹1.97 lakh crore (approximately $26 billion) across 14 key sectors, the PLI scheme aims to position India as a global manufacturing hub and create national champions.
The success of the PLI scheme is evident in the significant increase in production, employment generation, economic growth, and exports. As of January 2024, 746 applications have been approved in 14 sectors, with an expected investment of ₹3 lakh crore. Notably, 176 MSMEs are among the PLI beneficiaries, showcasing the scheme’s inclusive approach.
