PLI is Boosting MNCs to Start Manufacturing in India: Modi Mantra Works

India’s manufacturing sector to become an engine for economic growth and the unique job creator in the country. As the government has finalised the norms for Production Linked Incentive (PLI) scheme for the telecom and networking equipment for the cabinet’s approval and has started inviting applications for the second round of large-scale electronics manufacturing under the production-linked incentive scheme with focus on some electronic components like motherboards, semiconductor devices, among others.

Application window for the scheme will remain open till March 31 which may be further extended, according to guidelines issued by the Ministry of Electronics and IT. “The second round of the PLI scheme is open for accepting applications,” an official memorandum dated March 11 said. “The tenure of the second round of PLI scheme is for four years and the incentive shall be applicable from April 1, 2021.”

The first round of the scheme was open for receiving applications till July 31 which attracted participation from global majors like Apple’s contract manufacturers Foxconn, Wistron and Pegatron; Samsung; local players Lava, Optiemus, Dixon etc.-committing investment of over Rs 11,000 crore. While the first round targeted mobile manufacturing with incentives for 20 companies, the second round has expanded the window for up to 30 eligible companies.

The number of devices-notebook and desktop PCs, tablets, and mobile phones-in use globally will total 6.2 billion units in 2021, according to Gartner Inc. In 2021, 125 million more laptops and tablets are expected to be in use than in 2020.

The COVID-19 pandemic has permanently changed device usage patterns of employees and consumers as the remote work turning into hybrid work, home education changing into digital education and interactive gaming moving to the cloud, both the types and number of devices people need, have and use will continue to rise.

In 2021, the number of laptops and tablets in use will increase 8.8% and 11.7%, respectively, while the number of desktop PCs in use is expected to decline from 522 million in use in 2020 to a forecasted 470 million in use in 2022.

However, the smartphone is also a key tool that people use to communicate and share moments during social distancing and social isolation. However, the demand for connected 4G/5G laptops and other devices will rise as business justification increases.”

We continue to see gaming PCs and monitor sales at all-time highs and Chrome-based devices are expanding beyond education into the consumer market. In retrospect, the pandemic not only fueled PC market demand but also created opportunities that resulted in a market expansion.

Let’s understand from the manufacturing companies established in India ,on how they are working closely to see how the OEMs can get the PLI (production-linked incentive) benefit, which the government of India has rolled out. The government had introduced a PLI scheme offering incentives to companies manufacturing in 10 key sectors in the country.

It has aimed at making manufacturers globally competitive and attract investment in the areas of core competency. The scheme is targeted at making the country an integral part of the global supply chain.

10 key specific sectors once they are individually implemented:

The scheme for ACC battery is likely to incentivize large domestic and international players in establishing a competitive ACC battery set-up in the country

The scheme is likely to make the Indian automotive industry more competitive and will enhance global activity for the sector.

For the telecom sector, the scheme is expected to attract large investments from global players and help domestic companies seize emerging opportunities, to become major players in the export market.

The scheme will attract large investment in the sector to further boost domestic manufacturing, especially in the MMF segment and technical textiles.

A focused scheme for solar PV modules will incentivize domestic and global players to build large-scale solar PV capacity in the country and help in capturing the global value chains for solar PV manufacturing

A PLI scheme in the specialty steel sector will help in enhancing manufacturing capabilities for value-added steel leading to an increase in total exports.

Specific product lines in food sector having high growth potential to generate medium-to large scale employment have been identified for providing support through the PLI scheme.

Production linked incentive scheme is likely to boost the manufacturing output in 5-Years, Says PM Modi and with an average of 5 per cent of production is given as incentive. This means that PLI schemes will lead to production worth USD 520 billion in India in the next five years.

# The Union cabinet approved incentives worth Rs12,195 crore for domestic manufacturing of telecom and networking equipment, seeking to cut the country’s massive dependence on imports of such gear.

# The cabinet Approves ₹ 4,500 Crore PLI Scheme To Boost Solar Equipment Manufacturing . The PLI scheme is aimed at adding 10,000 MW manufacturing capacity of integrated solar PV modules entailing direct investment of ₹ 17,200 crore. The PLI scheme is likely to create direct employment of around 30,000 and indirect employment of 1.2 lakh, according to the government.

# The cabinet Approves ₹ 10,900 Crore Incentive Scheme For Food Processing Sector ,the production linked incentive scheme to boost exports and facilitate expansion of food processing capacity ,where it’ll help create 2.5 lakh jobs by 2026-27, boost exports and facilitate expansion of food processing capacity to generate processed food output worth ₹ 33,494 crore.

The PLI scheme for the Telecom sector, will reduce India’s imports of telecom equipment worth over Rs.50,000 crore, communications, electronics and information technology minister Ravi Shankar Prasad had told reporters after the Cabinet's decision.

PM Modi said the government is continuously carrying out reforms to boost domestic manufacturing. In this year's Budget, about ₹ 2 lakh crore was earmarked for the PLI scheme for the next five years and "there is an expectation that the scheme would result in increasing the production by about USD 520 billion in the next five years", he said

About the benefits to get from PLI, PM Modi said, there are 13 sectors have been brought under the ambit of the scheme and it would benefit the entire ecosystem associated with these sectors.

With PLI in auto and pharma, there will be very less foreign dependence related to auto parts, medical equipment and raw materials of medicines. There is an expectation of more than ₹ 15,000 crore investment in the next 5-6 years under PLI, which will lead to ₹ 3 lakh crore in pharma sale and export increase of worth ₹ 2 lakh crore.

Secondly, the energy sector will be modernised in the country with the help of advanced cell batteries, solar PV modules and specialty steel," he said adding the PLI for the textile and food processing sector will benefit the entire agriculture sector.

PM spoke correctly as the IT hardware is estimated to achieve ₹ 3 lakh crore worth production in four years and domestic value addition is expected to rise from current 5-10 per cent to 20-25 per cent in 5 years," he said adding similarly telecom equipment manufacturing will witness an increase of about ₹ 2.5 lakh crore in five years. We should be in a position to export worth ₹ 2 lakh crore from this," the Prime Minister said.

In Box: The environment is now conducive for overseas component manufacturers to shift their facilities to India. As the nation’s telecom sector stands poised to transition from 4G to 5G soon, the PLI scheme offers the right impetus by aiming to create a vibrant telecom manufacturing ecosystem.

Hardware innovation is transforming the shop floor in the Fourth Industrial Revolution.

Both NPE and PLI are significant initiatives because the capability to manufacture mobiles can drive a paradigm shift for the ‘Make in India’ and Aatmanirbhar Bharat programmes. Mobiles are at the core of every single electronics item and the designs, which includes PCB, display, batteries, assembly, mechanical and industrial design, hardware and software.

By promoting a complex part of electronics, the two programmes will not only boost domestic mobile manufacturing but also help in establishing the entire electronics ecosystem in the country. This is one of the best ways to encourage local companies to make their presence felt in telecom manufacturing. Telecommunications sector has played a pivotal role in facilitating growth of the economy and is a key enabler of digital connectivity and Digital India.

Soon after the announcement of the PLI scheme for electronics manufacturing, the Centre cleared the names of 16 companies. These included foreign companies such as Samsung, Rising Star, Pegatron, Wistron and Foxconn, plus Indian brands such as Lava, Micromax, UTL Neolyncs, Padget Electronics and Optiemus Electronics. Over the next five years, these Indian entities have proposed a production output of Rs1.25 lakh crore.

By Dr. D. K Sahu, Publisher-VARINDIA