industry

MeitY refuses to treat FY22 as first year for PLI targets


The government’s production-linked incentive (PLI) scheme to make India a smartphone-manufacturing hub has hit a hitch: the Ministry of Electronics and IT (MeitY) has opposed allowing 15 of the 16 applicants to treat year 2021-22, instead of 20-21, as the first year for production targets.

South Korea’s Samsung has met its targets for FY20-21, and the ministry has cited this as the reason for its decision. A senior government official said it cannot set one timeline for one company and another for the rest.

“Either all the companies seek a deferment of the entire policy implementation by one year or all of them consider 2020-21 as the first year. We cannot give incentive to one company and defer it for the others,” the official told ET.

If the government sticks to the current timelines under the five-year scheme, the companies that didn’t meet the targets can expect incentives only for a maximum of four years.

The smartphone industry is pushing hard to defer the targets by a year for the companies other than Samsung, citing late allotment of PLI approval letters, inability to bring engineers from China to set up the plant and machinery in India and lack of chipsets apart from the pandemic induced logistical issues, among other factors.

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“At the very least, we deserve an objective assessment of our case for zero year on our performance and merits,” Pankaj Mohindroo, chairman of industry body India Cellular & Electronics Association told ET. The association’s members include Foxconn & Wistron, which manufacture iPhones for Apple, among other top handset makers.

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The final decision on the matter rests with an empowered committee that comprises the secretaries of the departments of revenue, expenditure, economic affairs, promotion of industry and internal trade and MeitY; besides the Director-General of Foreign Trade and the chief executive of the Niti Aayog.

Besides Samsung, other major applications to the PLI scheme for handsets include Apple contract manufacturers Foxconn, Wistron and Pegatron, Optiemus, Dixon, Lava, Bhagwati (Micromax) and UTL. Approved component makers include Sahasra, AT&S, Neolync, Ascent Circuits, Visicon and Walsin.

According to section 8.8 and 8.9 of the guidelines for operation of the PLI scheme issued on June 1 last year, “In case of a force majeure event, the empowered committee may amend, modify and withdraw any clauses under the scheme.”

What complicates matters is that the nodal ministry for the scheme, MeitY, is opposed to granting any relief on the PLI timelines, under which the first year for incentives on the basis of meeting investment and production targets ended on March 31.

Samsung was the only company to have been able to meet the first-year targets of incremental production and of investment. Industry executives said Samsung could do so as it already had a factory up and running.



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