(Image source from: www.kiplinger.com)

A Rs 36,000 crore fund may be unveiled by the federal government for providing the production linked incentives (PLI) to the smart phone makers in order to wean high-end digital manufacturing away from China and Vietnam to India in the upcoming budget, says three high authorities officers.

A production-linked incentive is being worked on by the MeitY (Ministry of Electronics and Information Technology) and there is to be a certain criteria in order to avail this incentive. An official has said to Economic Times that they are in need of only those companies that are going to make India a hub for electronics manufacturing and exports to be able to use the incentive.

The official has said that the primary aim was to attract the companies in the global supply chain such as Apple and Samsung for making India as a base for their manufacturing and export where as, the other incentives were to help the local phone makers such as lava in becoming dominant global players in the entry segment. These incentives that included credit guarantee schemes and interest subvention schemes were also being trashed out.

The manufactures of the smart phones which included the manufactures of Apple, Samsung and Lava have been met by the prime minister Modi as they sought suggestions in making India a hub for electronics manufacturing and export hub. A target has been set in order to increase the exports of smart phones from the country to $110 billion by 2025 from $4 billion currently.

This scheme would bring cheer to the industry of manufacturing the smart phones as they had been tensed after a notification from the government have halved MEIS support from 4% to 2% from January 1. the charity on the export sops have been demanded by the Foxconn which is the world’s largest contract manufacturer of smart phones which makes phones for Apple, Samsung, Huawei, Vivo and Oppo,  being the biggest in India which accounts together for over 80% of $500-billion global mobile phone market.

The Vietnam policy support renders India uncompetitive by 10-12% points and the disability lies between 19-23% when compared to China, based on various industry studies.

A subsidy has been flagged for machinery and equipment, cost of power, incentive for supporting industry, labour subsidy, logistics and reduction of land rentals as other disabilities that are faced by India when compared to Vietnam being its rival. This subsidy has been flagged by the Indian Cellular & Electronics Association which has Apple, Foxconn, Xiaomi and Flextronics among its members. The government officials are making sure that usage of funds is not being done for manufacturing the devices to be sold locally and is also ensuring that the policy is compliant with WTO.

-Shrithika Kushangi