~Describe it as a “game-changer”
~India can become a leader in global mobile exports
New Delhi, March 21, 2020: The mobile manufacturing industry wholeheartedly welcomes the new Production-linked Incentive Scheme (PLI) as a replacement for the MEIS. This new policy advances the Honorable Prime Minister’s vision expressed in the National Policy for Electronics (NPE), 2019 to make India a global hub for mobile and component manufacturing.
“Once every decade, the government announces a policy that can be a game-changer — taking the sector to the next level. PLI is exactly that. Its visionary, scalable and global in its outlook” said Pankaj Mohindroo, Chairman, ICEA.
The new Production-linked Incentive Scheme
The PLI scheme is of global scale, easy to implement and performance-linked. It will not only spur manufacturing but more importantly exports of mobile handsets at a global scale. This will help India emerge as a leading exporter in the world while attracting investments from some of the world’s biggest manufacturing value chains on one hand and building home-grown Indian champions on the other. A win-win for everyone.
The National Policy for Electronics 2019 envisions India to reach a mobile phone production of USD 190 billion by 2025, of which USD 110 billion would be exported. PLI is the policy intervention to support the ambition to build the electronics sector, where the main focus remains on manufacturing of mobile phones and components.
A visionary step by the Government
The PLI has several direct benefits for the economy. It creates lakhs of jobs, attracts investment, builds competitiveness, contributes to taxes and makes substantial contribution to the GDP growth. India’s demand for mobile phones can be a drain on foreign exchange due to component exports. PLI which will build massive export capacity, aims to make India a net positive foreign exchange earner over the next 5 years.
Thanking the government for its intervention Mr. Pankaj Mohindroo said “We are thankful to Shri Modi, the Prime Minister, Shri Ravi Shankar Prasad, Minister for Electronics and IT, Smt. Nirmala Sitharaman, Finance Minister and senior officials at NITI Aayog, Finance Ministry and most importantly MeitY who conceptualized and structured this visionary scheme to build India’s global mobile phone prowess.”
“The new PLI scheme would not only support the Government’s efforts to establish India an integral part of the Global Value Chain (GVC) in the mobile handset sector, but this step will also help develop Indian Champion companies to tap the Global as well as Indian markets through these specific production incentivization measures”, added Mr. Mohindroo.
Propelling India as a global leader in mobile exports
Mobile phone production is a “winner takes all” business. Currently, 85% of the global mobile exports is catered to by 2 countries – China and Vietnam. Further, only 3 global ecosystems – Samsung, Apple and the Chinese majors such as Oppo, Vivo, Xiaomi and Huawei, dominate the multi-billion-dollar mobile phone export. It is well-recognized that India suffers a manufacturing disability vis-a-vis China (19-23%) and Vietnam (9-12%). The PLI is a mid-term stimulus to correct such disabilities, to help India build global capacities.
Like most manufacturing businesses, export competitiveness leads to large domestic growth. Since 2017, even with a commendable 10X growth in exports of mobile phones, from USD 200 million to USD 1.6 Billion in 2018-19 and approx. USD 4.0 billion in 2019-20, India constitutes merely 1.5% of global exports currently. The PLI has the potential of making India one of the three countries that can serve the over 200 countries’ demand worldwide for whom electronics and particularly mobile phones is a top-ranking import.
About ICEA: ICEA is the body of Mobile Handsets and the Electronics industry which comprises of manufacturers, brand owners, technology providers, VAS application and solution providers, distributors and retail chains of mobile handsets and electronics. ICEA is now committed to carrying forward its mission of building Indian manufacturing and design in verticals other than mobile handsets while consolidating the gains made in the mobile handset and components industry.
