PLI scheme proves highly effective for India
What's the story
India has manufactured mobile phones worth ₹24 lakh crore ($250 billion) since FY 2020-21, largely due to the government's Production-Linked Incentive (PLI) scheme. The fiscal stimulus under this scheme for smartphones is estimated to be around ₹21,000 crore for the FY21-26 period. This accounts for less than 1% of the total production value, making it a highly effective and fiscally prudent initiative.
Scheme effectiveness
PLI surpasses production and export targets
The PLI scheme has surpassed its targets for both production and exports. The original target was ₹10.5 lakh crore for production and ₹6.5 lakh crore for exports. Companies like Apple vendors Foxconn, Tata Electronics, Samsung, and Dixon that directly benefited from the scheme have contributed to a production worth around ₹11 lakh crore. Even in this case, the government's outgo remains under 2% against the total production value.
Industry growth
Mobile manufacturing contributed nearly 1L/cr GST
The PLI scheme has not only benefited companies that received direct government incentives but also those that didn't. This is because the scheme has helped create an entire manufacturing ecosystem in India. The mobile manufacturing industry alone contributed nearly ₹1 lakh crore in incremental GST during the tenure of this scheme.
Scheme structure
Industry seeks extension of smartphone PLI
Unlike other PLI schemes aimed at reducing import dependence in large domestic consumption sectors, the smartphone PLI was specifically designed around incremental net sales, global scale, and export competitiveness. It replaced the Merchandise Exports from India Scheme with a performance-linked architecture tied to incremental production. Amid geopolitical uncertainties and the US's tariff flip-flop, industry players are pushing for an extension of these incentives for another five years.