 "Foxconn, Apple, Samsung to receive Rs 4,400 cr under smartphone PLI scheme")
Apple Inc and Samsung, along with their contract manufacturers in India, are set to receive more than Rs 4,400 crore in incentives for meeting production targets in the financial year 2023 under the government's production-linked incentive (PLI) scheme for smartphones, according to a report by the Economic Times (ET). The beneficiaries also include Foxconn (Hon Hai), Wistron (now owned by Tata Group), Pegatron, Samsung, and Dixon Technologies, a homegrown electronics company.
The original plans had set an outlay of Rs 6,504 crore for the financial year 2024; however, not all companies selected for the scheme met the outlined production targets. Therefore, the full amount will not be utilised.
Companies that failed to meet their PLI targets include Indian firms Lava and Optiemus Electronics, as well as Rising Star (Bharat FIH), a smartphone contract manufacturer for China's Xiaomi.
Four out of five global firms have met the targets in FY23, resulting in the highest amount disbursed so far under the scheme in FY24.
The government has released approximately Rs 2,500 crore under the scheme, with Rs 500 crore disbursed to Samsung for meeting targets in the first year and Rs 1,700-2,000 crore released for the three contract manufacturers of Apple and Dixon.
PLI schemes for smartphones
Under the PLI scheme for smartphones, companies receive incentives one year after achieving production targets. Those surpassing the targets can claim additional benefits from the remaining funds not utilised by firms that failed to meet their objectives.
Graded incentives are provided in the form of cashback, with a six per cent rebate on incremental sales for the first two years, followed by five per cent for the third and fourth years, and four per cent for the fifth year.
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To claim these benefits, companies like Samsung and Apple's contract manufacturers must invest a minimum of Rs 250 crore in the first year of the scheme. A similar investment is required for each subsequent year. In terms of production, global companies are required to manufacture incremental goods, specifically mobile phones valued at Rs 15,000 and above, amounting to Rs 4,000 crore, Rs 8,000 crore, Rs 15,000 crore, Rs 25,000 crore, and Rs 50,000 crore in the final year of the scheme.
Since its inception in the financial year 2021, the PLI scheme has undergone revisions following the failure of most beneficiaries to meet targets in the initial year, with the exception of Samsung.
The impact of the PLI scheme on India's electronics sector has been significant, with mobile phone exports reaching $10.5 billion from April to December 2023.