Explained: What is the production linked incentive scheme for electronics manufacturers?
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.
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