India’s Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing is expected to enable an economic growth to the tune of 0.5 percent in five years, as per financial services firm Credit Suisse, says a report by Bloomberg Quint. The scheme could contribute $55 billion to the GDP in the next five years. One of the primary factors to which the acceleration in production can be attributed is Apple Inc entering into contract with several manufacturers to set up shops in India.
The scheme announced in April, 2020 offers production linked incentive to invigorate domestic manufacturing. It aims at attracting large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking, and Packaging (ATMP) units.
As per the scheme, an incentive of 4-6 percent is to be awarded on incremental sales of goods manufactured in India for a period of 5 years. According to the estimate by Credit Suisse, this is supposed to bring around 10 percent of global handset production to India in five years to come.
The total number of international and local companies that have applied for the scheme is 22 as of now, including iPhone assemblers Foxconn, Pegatron, and Wistron.
The financial services firm added that crossing of even the minimum thresholds for domestic manufacturing will lead to a contribution around $55 billion to the country’s GDP over the period of five years. Although the government believes it will add $150 billion to the economy accompanied by 3 lakh direct jobs.
The scheme launched by Prime Minister Narendra Modi has been conceptualized with goal of catapulting India to the top three positions in global mobile manufacturing. If we look at the past growth of the market, electronics manufacturing in the country registered a growth of 1.7 percent from 2012 to 2018, increasing by $41 billion.
Attributing most of the growth to the shift from China, mainly due to Apple, Credit Suisse said, “This would occur mainly through its contract manufacturers: Foxconn, Pegatron and Wistron, which could see, respectively, about 8 percent, 15 percent and 20 percent of additional manufacturing annually happen in India n five years.”