Prime Minister Narendra Modi’s announcement of the Aatmanirbhar Bharat package earlier this year to radically transform the Indian economy has started to change the paradigm of India’s participation in the global supply chain. While a new start has occurred in several areas like PPE kit manufacturing, the government is also working to leverage sectors like mobile manufacturing and assembly to radically alter the global supply chain order.
Export Oriented Mobile Manufacturing Gets a Big Boost
Already the second largest mobile manufacturer of the world, the government yesterday took a key decision to push this even further and capture a piece of the global manufacturing capacity. Earlier in April, the Ministry of Electronics and Information Technology (MEITy) had notified a production linked incentive scheme for making India a manufacturing hub for smartphones. The response to the scheme has been extremely positive, with over twenty-two applications coming in. Minister Ravi Shankar Prasad had personally briefed the media on the scheme in June as well.
The net result is equally encouraging, the empowered committee handling them yesterday approving applications estimated to export around $100 billion (₹7.3 lakh crore) worth mobile phones under the production linked incentive scheme (PLI) and all the applications will be placed before the Cabinet probably this week. The shortlisted ones essentially consist of five overseas applicants – Samsung, two units of Foxconn, Wistron and Pegatron, seven Indian applicants – Lava, Dixon, Micromax, Padget Electronics, Sojo, Karbonn and Optiemus – and another six components manufacturing players.
Building the Whole Ecosystem
“The extraordinary response to the PLI shows enormous trust of the global community in India’s manufacturing capability and leadership of Prime Minister Narendra Modi,” Communications & IT minister Ravi Shankar Prasad told the Economic Times when contacted on this story.
The scheme is part of the trilogy of schemes announced by MEITy to create the entire ecosystem necessary for production from scratch. Apart from the production linked incentive scheme, MEITy had also announced a Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.
The SPECS provides financial incentive of 25% on capital expenditure for the identified list of electronic goods, including components, semiconductor/display fabrication units, Assembly, Test, Marking and Packaging (ATMP) units, specialized sub-assemblies and capital goods necessary to manufacture them. The Scheme targets investments in new units and expansion, modernization and diversification of existing units.
Similarly, EMC 2.0 provides for creation of world class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds/Plug and Play facilities for attracting major global electronics manufacturers along with their supply chain to set up units in the country. The EMC 2.0 scheme provides financial assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country.
With the Cabinet clearing the proposal as expected, India can certainly give other nations a run for their money in this space.