Domestic component manufacturers petition govt for favourable norms in mega incentive scheme

NEW DELHI: Homegrown electronics component manufacturers have said they may be left out of the government’s recently announced Production Linked Incentive (PLI) scheme, whose Rs 41,000-crore outlay promises several incentives for electronics manufacturing in the country.

They have argued that since the threshold for investment has been kept at Rs 100 crore, which is the same for local as well as foreign companies, it may be difficult for Indian component manufacturers to commit investments of this magnitude.

They have, in fact, petitioned the government for a lower investment threshold like in the case of mobile phone manufacturers where the limit has been pegged at Rs 200 crore for domestic companies, much less than the Rs 1,000 crore required by foreign firms.

Out of the total outlay of the PLI scheme, around Rs 3,000 crore has been reserved for component manufacturers.

Although the PLI is a good scheme as it addresses the impact of disabilities which the industry suffers compared to other manufacturing countries, the investment threshold for components is high, said Vinod Sharma, managing director of Deki Electronics.

Sharma, who wrote to the Ministry for Electronics and IT in his capacity as chairman of the CII National ICTE Committee said the industry has “requested for the investment threshold for Indian component companies to be Rs 20 crore and for foreign ones to be kept at Rs 100 crore.”

“I frankly think that once the current deadline is over and in case there will not be adequate applicants for investments in components — unless there is some interest from mobile components – the government will revise the guidelines,” Sharma said.

Both CII and the sectoral lobby group Electronic Industries Association of India (Elcina) have highlighted these issues in their representation to the ministry as well as Niti Aayog.

They have also sought that corresponding incremental sales should not be as high as Rs 600 crore in the fifth year of operations after an initial investment of Rs 100 crore, since the investment to turnover ratio in the case of component manufacturers cannot be higher than 1:3.

“The investment threshold for domestic component manufacturers may be kept at 40% (Rs 40 crore) of the regular threshold over 4 years. This would enable a larger opportunity for Indian companies and would enable support to a larger group of companies and types of components,” said Rajoo Goel, secretary general of Elcina.

Goel added that $3.51 billion worth of electromechanical components are imported even today and can be easily localised with PLI support.

The government has been accepting applications under the PLI scheme, which is meant to attract large scale manufacturing into India, since early this month.

The PLI incentive of 4-6% on incremental sale will apply only to mobile phones and specified electronic components such as Printed Circuit Boards (PCB), photopolymer films and Assembly, Testing, Marking and Packaging (ATMP) units, among others.

An executive at a top global component manufacturer, however, said that the government has kept the threshold high since it was looking for “global scale” and for companies which can make long term and large commitments.

“Component companies can also look at building a consortium to take advantage of the scheme…,” the executive said.

[Source – Economic Times]


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