Govt notifies mobile phone manufacturing scheme; extra incentives for Indian brands

Govt notifies mobile phone manufacturing scheme; extra incentives for Indian brands The scheme was approved by the Union Cabinet last month and builds on the PLI Scheme for Sizeable Scale Electronics Manufacturing which ran from 2020 to the last financial year.

Key points

• The ₹62, 500 crore scheme had been approved by the Union Cabinet on July 15, and continues the PLI Scheme for Sizeable Scale Electronics Manufacturing (LSEM).
• "Around 70-75% of phones were imports in 2014-15, and now we're exporters, " Mr.
• According to Krishnan, the scheme would create 60, 000 direct jobs.
• With the notification, the Ministry provided some fresh information regarding how the scheme would be operationalised.
• Indian brands will additionally enjoy a domestic design and research & development incentive of 3%.

Notably, the Ministry of Electronics and Information Technology (MeitY) on Friday notified the Mobile Phone Manufacturing Scheme (MPMS), aimed at incentivising the domestic assembly of smartphones and greater local value addition in the process. The ₹62, 500 crore scheme had been approved by the Union Cabinet on July 15, and continues the PLI Scheme for Sizeable Scale Electronics Manufacturing (LSEM). It ran from 2020 to the last financial year.

With the notification, the Ministry provided some fresh information regarding how the scheme would be operationalised. For instance, phone makers receive extra incentives for sourcing certain parts domestically. This is on top of the base incentive (tapering down from 2.75-2.25% over the five-year tenure, with rates of 2.25-5% depending on the year and the incremental sales) for the assembly itself. These extra incentives amount to 1.5% (with individual component incentives ranging from 0.2-0.5%).

For context, the 1.5% extra incentive would only be applicable if a firm is sourcing domestically for at least a quarter of the phones it sells in a given fiscal year. While foreign phonemakers face a higher bar to avail incentives, the corpus is fungible overall, meaning there is no earmarked amount as such for domestic players.

Indian brands – which will need to be majority-owned by Indian citizens and incorporated in India, along with intellectual property and trademarks held locally – will have a flat 5% incentive throughout the scheme's tenure and are not subject to a minimum sales threshold applicable to other brands; they will have a baseline fixed at 2025-26. Indian brands will additionally enjoy a domestic design and research & development incentive of 3%. While others need a minimum of ₹10, 000 crore, indian brands only need to demonstrate a ₹1, 000 crore turnover.

In practice, the scheme pushes expectant firms to grow production rapidly. Incentives are only disbursed for sales that are beyond 115% of the production of the previous fiscal year. For instance, if a unit produced ₹10 crore worth of phones in the preceding fiscal year and then ₹12 crore in the next, it would only be eligible for incentives on production of ₹50 lakh.

IT Secretary S. According to Krishnan, the scheme would create 60, 000 direct jobs. Domestic value addition in mobile phone manufacturing is at 23%. It is a substantial deepening of the sector, Mr. Krishnan remarked. Our goal of doubling overall domestic value addition from 18-23% to 35-40% will be achieved in the coming days. The latter target is in line with the value addition achieved by Chinese phone assembly units. The number has a ceiling due to the global nature of electronics value chains, where various components crisscross the globe multiple times.

Mr. According to Krishnan, the phone manufacturing industry was notable since "technology and skill transfer enables new sectors across the ecosystem laptops, gaming consoles, drone manufacturing, medical devices, components, tablets, smart watches and automobile windshields."

Buoyed by geopolitical de-risking and the first PLI scheme, a massive amount of phone assembly by firms like Apple and Samsung have moved into India in a massive way, making India an exporter of finished handsets. "Around 70-75% of phones were imports in 2014-15, and now we're exporters, " Mr. Krishnan pointed out. "India is the second largest phone manufacturer in the world and practically all phones sold here are made here."

In practice, the administration is aiming for ₹39 lakh crore in cumulative production (the combined sale value of the finished products) by the end of MPMS. It runs through 2030-31, and cumulative exports worth ₹15 lakh crore. As well as any "non-fiscal" backing from the administration, an empowered committee will create recommendations to the administration on applications by Indian brands for incremental incentives. The forthcoming guidelines will provide greater clarity on the disbursement and approval regimes.

In short, govt notifies mobile phone manufacturing scheme; extra incentives for Indian brands is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.