Can India's PLI Scheme Enhance Telecom and Electronics Manufacturing?

The PLI Scheme has truly impacted India’s telecom and electronics manufacturing industries. It was created to boost local production and reduce dependence on imports. Since it started, it has delivered impressive results in a short period.

Over the past three years, India's Production Linked Incentive (PLI) scheme for the telecom sector has been a gamechanger. It has attracted investments amounting to ₹3,400 crore, resulting in a remarkable surge in domestic telecom equipment production, valued at over ₹50,000 crore. This surge has not only met local demand but also fueled exports, which have soared to approximately ₹10,500 crore.

Importantly, this growth has created over 17,800 direct jobs and numerous indirect employment opportunities, boosting economic activity. Moreover, India has slashed its import dependency by 60%, achieving near self sufficiency in critical areas such as antennae, GPON and CPE thus enhancing its technological independence and resilience in the telecom sector.

What is the PLI scheme for electronics manufacturing?

Production Linked Incentive (PLI) scheme for Large Scale Electronic Manufacturing, focusing on mobile phones and their components aims to support India's goal of self reliance (Atmanirbhar Bharat) and boost telecom equipment production. Under this scheme the government provides financial assistance based on increased sales of products made in India.

Government data highlights a transformation in India's mobile phone manufacturing landscape in 2014-15, India produced 58 million units while importing 210 million units. By 2023-24 India's domestic production soared to 330 million units, accompanied by a dramatic reduction in imports to just three million units. During this period, India also became a notable exporter, shipping close to 50 million units.

This surge in domestic production and exports has led to a substantial decrease in the telecom sector's trade deficit, which plummeted from ₹68,000 crore to ₹4,000 crore over the past five years. PLI scheme has thus bolstered India's capabilities in mobile phone manufacturing and contributed to its aim of becoming a global hub for telecom equipment production.

Key Highlights

• The telecom equipment manufacturing sector has grown with sales by companies benefiting from the Production Linked Incentive (PLI) scheme exceeding Rs 50,000 crores. In FY 2023-24, sales of telecom and networking products by these companies surged by 370% compared to FY 2019-20.

• This growth has resulted in the creation of over 17,800 direct jobs and numerous indirect jobs in manufacturing, research, and development.

• By promoting local production, PLI scheme has reduced India's dependence on imported telecom equipment by 60%. India is now almost self sufficient in producing items such as antennae, GPON and CPE. This reduces import reliance, enhances national security and promotes self sufficiency.

Indian manufacturers are increasingly competitive on the global stage, providing high quality products at competitive prices.

Recent Developments in PLI Scheme

Indian government has reopened the application period for the Production Linked Incentive (PLI) Scheme for White Goods, focusing on air conditioners (ACs) and LED lights. Companies can apply between July 15 and October 12 with both new companies and those already part of the scheme eligible to apply. Existing companies wanting to invest more or switch product categories can also apply, provided they meet specific conditions outlined in the Scheme Guidelines available online.

Approved applicants will receive incentives for the remainder of the scheme's duration, while new applicants and those investing more will get incentives for up to three years. Claims will now be processed quarterly instead of annually, aiding better financial management for companies with guidelines updated accordingly. So far, 66 companies have committed ₹6,962 crore to the scheme, with firms like Daikin, Voltas, LG, Blue Star, and Dixon investing in producing parts for ACs and LED lights, helping manufacture components that were previously not made in India.

Final Words

Indian government's PLI scheme along with other initiatives has helped reduce the gap between what India imports and exports in telecom products. Now, the total value of telecom equipment and mobiles exported from India is over ₹1.49 lakh crore. This is slightly higher than the ₹1.53 lakh crore worth of imports. It shows that India is moving towards exporting more than it imports in this sector, making our telecom and electronics manufacturing industry more competitive globally.