Govt makes first disbursement under PLI scheme, Delhi firm to get Rs 52 cr

Dixon Technologies getting money after international companies expressed concern about scheme due to delays in disbursement

The government has cleared the first disbursement under its production-led incentive (PLI) scheme across sectors, allotting a Delhi-based company about Rs 52 crore for October-December 2021. 

The money, to be given to Dixon Technologies — an electronics manufacturing services company (EMS) tasked to manufacture mobile devices — comes after international companies expressed concerns about the scheme over delays in disbursements. 

Under the PLI scheme for mobile devices, companies that meet their investment and incremental production revenues will get 4-6 per cent incentive for five years on their incremental sales. The incentive for the first year of the scheme — FY22 — is 6 per cent, which is given to companies so that it can make them more competitive globally by reducing the cost advantage they have over China and Vietnam.

In a tweet, Niti Ayog announced that the empowered committee chaired by its CEO on Friday approved the first incentive for mobile manufacturing under the PLI scheme for large-scale electronics manufacturing and this was the first-ever disbursement under any PLI scheme.

Dixon said the government was processing its application for January-March 2022. “We are pleased to be the first beneficiary of the PLI scheme in the country and this will give us a big encouragement to make India a global hub for manufacturing, especially in mobile devices. And we are committed to invest in the component eco system and design-led manufacturing,” said Sunil Vachani, managing director, Dixon.

Earlier, IT hardware and other products expressed concerns on whether they should continue with additional investments as a result of delays in disbursements. Companies submitted a petition to the Ministry of Electronics and Information Technology (MeitY) to expedite payments.

Companies said the Industrial Finance Corporation of India — which is reviewing and releasing incentives — is taking more time than they anticipated to audit claims submitted to the government.

In the mobile device space, other companies waiting to receive their disbursements or making their applications for it include Samsung, Hon Hai (better known as Foxconn, and a contract manufacturer for iPhone maker Apple) and Taiwan giant Wistron. In IT hardware, Dixon, US PC maker Dell and home-grown player Bhagwati (Micromax) have applied or are expected to apply for PLI incentives.

The mobile device scheme has already been extended for one year till 2025-26 as several companies petitioned that they could not meet the eligibility criteria under the scheme due to the adverse impact of the pandemic and the delay in the scheme take-off. The request was subsequently accepted by the government. Even the PLI for IT hardware, where the incentive was for only four years, is being revamped to make it attractive for players.

STEADY PROGRESS

• Rs 1.68 trillion Sales undertaken by applicants (major electronics players, of which mobile manufacturers is a part) under PLI scheme for Q1
• 28,636 Total employment generated under this PLI scheme
• 139% Growth in exports in the last 3 years