Explained: What is the production linked incentive scheme for electronics manufacturers?
31st July, 2020
Context:
Global electronics giants such as Samsung, Pegatron, Flex, and Foxconn among others are looking to either set shop or expand their presence in India.
About Production Linked Incentive (PLI):
The IT ministry had on April 1 notified a scheme, which would give incentives of 4-6 per cent to electronics companies, which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems.
Companies that make mobile phones, which sell for Rs 15,000 or more will get an incentive of up to 6 per cent on incremental sales of all such mobile phones made in India.
Companies, which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crores for the next four years.
Will be active for five years with financial year (FY) 2019-20 considered as the base year for calculation of incentives.
All investments and incremental sales registered after FY20 shall be taken into account while computing the incentive to be given to each company.
Incentives during the years:
Ist year: 5,334 crores
IInd year: 8,064 crores
IIIrd year: 8,425 crores
4th year: 11,488 crores
5th year: 7,640 crores
Total: 40,951 crores.
Consideration of components:
All electronic manufacturing companies, which are either Indian or have a registered unit in India will be eligible to apply for the scheme.
These companies can either create a new unit or seek incentives for their existing units from one or more locations in India.
Any additional expenditure incurred by companies on plant, machinery, equipment, research and development and transfer of technology for manufacture of mobile phones.
However, all investment done by companies on land and buildings for the project will not be considered for any incentives or determine eligibility of the scheme.