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ICEA urges Centre to extend timeline of PLI scheme by a year

In its letter to the Centre, the ICEA proposed that the current fiscal (FY21) be considered as "zero year" with no incremental incentive for production to make up for disruptions due to the pandemic.

March 29, 2021 / 09:12 AM IST
The combined incentive scheme package for the first year is Rs 5,334 crore. (Representative image)

The combined incentive scheme package for the first year is Rs 5,334 crore. (Representative image)

Phone manufacturers have approached the government for a year's extension of the five-year production-linked incentive (PLI) scheme due to the coronavirus pandemic.

This comes as, of the 16 companies given PLI, South Korean maker Samsung was the only one able to meet the output goals for the first year ending March 31, The Economic Times reported.

In its letter to the Centre, the India Cellular & Electronics Association (ICEA) proposed that the current fiscal (FY21) be considered as "zero year" or "year of preparation" with no incremental incentive for production to make up for disruptions due to the pandemic, the report said.

Moneycontrol could not independently verify the report.

As per the letter, dated March 4, incentives should begin from FY22 and end in FY26, instead of FY25, "with no other change in scheme, keeping the yearly expenditure envelope unchanged."

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It also suggested that investments made in FY21 and FY22 combined to be considered as the first-year targets.

The letter also noted that any company which has completed the target "due to ability to exploit existing facilities, production lines, or having long-established presence in India,” should be given the incentives as per the existing scheme. The combined incentive scheme package for the first year is Rs 5,334 crore.

So far, only Samsung has met its production and revenue targets for the first year. The other 15 companies are Ascent, AT&S, Bhagwati, Dixon, Hon Hai, Lava, Neolync, Optiemus, Pegatron, Rising Stars, Sahasra, UTL, Visicon, Walsin, and Wistron.

Reasons cited for inability to meet targets include the lockdowns, short span for expansion (six months), shortage of chipsets, and travel constraints leading to unavailability of technical consultants, etc.

The ICEA also noted that there was 97 percent supply cuts “in certain cases" and pointed out that incremental investments in the current fiscal have “already exceeded Rs 1,300 crore,” besides the creation of 22,000 new jobs, and shifting of capacities to India from abroad.

It added that while short of the industry's collective first-year PLI targets, incremental production worth Rs 35,000 crore has already been achieved.
Moneycontrol News
first published: Mar 29, 2021 09:12 am

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