Samsung is one of the largest smartphone manufacturers in the country with a 20 percent market share. It is the only applicant that was eligible for incentives for fiscal years 21 and 22, under the popular Production Linked Incentive (PLI) scheme for mobile phones. However, Samsung has not yet seen the incentive disbursement.
In fact, Padget Electronics was the only company to receive government funding under the PLI. Padget is a 100% subsidiary of Dixon Technologies. It is reported that he received Rs 50 crore for the 22nd financial year, after approval of the empowered committee chaired by Parmeshwaran Iyer, CEO, NITI Aayog.
Samsung’s claim of Rs 900 crore for FY21, which is higher than the government’s estimate, is being examined by the Enabled Commission. The government demanded clarification from the Korean manufacturer, which caused a long wait for the exchange.
But industry insiders are hopeful for the way forward. Pankaj Mohindro, President of the Indian Cellular and Electronics Association (ICEA), explained that the center has expanded the scope of the scheme to six years, giving manufacturers flexibility to choose their own base year. While Samsung chose FY21 as the first year of the chart, all the other companies chose FY22 as the first.
He explained that, with the exception of one company, all foreign companies, which were approved under the scheme, have achieved their targets for fiscal year 22. Pegatron, which started production this year, will seek incentives for a period of four years only, starting from fiscal year 23. As for local companies, Pankaj Mohindro explained that two out of five applicants had met their FY22 targets.
He pointed out that the goals of the investment side were not a source of concern for international companies that have already invested the required amount and local companies that make the necessary investments every year.
Echoing similar sentiments, Hari Om Rai, Chairman and Managing Director of Lava International, claimed a growth rate of 60 percent, stating that investments were made for eligibility under the PLI scheme.
However, there were double concerns he had red flagged. He noted that the shortage of chips left the company in a difficult situation, but he expressed optimism that the problems on the supply side of semiconductors have been resolved. It also raised concerns about the demand. Figures released by Cybermedia Research reveal that the second quarter of fiscal 2020 saw smartphone sales decline by 12 percent. Recent data from International Data Corp also suggests that 2022 could see 80 million shipments of 5G smartphones, compared to an initial prediction of 85-90 million shipments in 2022.
However, Rai expressed confidence that Lava will meet the targets necessary to claim benefits under the PLI scheme.