Smartphone production-linked incentive (PLI) revenue rings louder; 19x revenue boost for government in four years

The smartphone production-linked incentive (PLI) scheme has proven to be a significant revenue generator for the Indian government, yielding 19 times the value of its incentive disbursements over the last four fiscal years. According to the India Cellular and Electronics Association (ICEA), the scheme contributed US$ 13.03 billion (Rs. 1,10,000 crore) to the exchequer and resulted in the production of goods worth US$ 148.71 billion (Rs. 12,55,000 crore) between 2021 and 2024. During this period, the government allocated US$ 687.3 billion (Rs. 5,800 crore) in incentives, with the total revenue from the scheme amounting to US$ 12.35 billion (Rs. 1,04,200 crore). In addition, the industry paid (Rs. 48,000 crore) in duties on mobile parts and components. In comparison, GST revenues increased by US$ 5.69 billion (Rs. 62,000 crore) after the government raised the tax rate on mobile phones from 12% to 18% in April 2020, coinciding with the scheme's launch.

The scheme, which aims to boost production, exports, job creation, and foreign direct investment (FDI), has been largely successful, driven by Apple’s contract manufacturers, including Foxconn, Pegatron, and Wistron, alongside Samsung. However, only a few Indian companies, like Dixon Technologies, have met the required incentive targets. Since its commencement in FY21, the scheme has created nearly 300,000 direct and 600,000 indirect jobs, becoming the largest job generator, especially for women in mid-skilled, blue-collar roles. Cumulative smartphone exports during this period reached US$ 34.01 billion (Rs. 2,87,000 crore), propelling India to the position of the third-largest exporter of smartphones by the end of 2023, with the sector now being India’s largest export to the US. Additionally, value addition in India's smartphone manufacturing has grown from 12% to nearly 20% in recent years.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.