Indian grown smartphone maker Micromax plans to invest Rs 500 crore on expanding local manufacturing and research and development (R&D) operations as it prepares a comeback plan in India's smartphone market.
Co-founder Rahul Sharma said that the government's production-linked incentive (PLI) scheme will help Micromax compete better with Chinese rivals. Chinese smartphone makers dominate the market now with over 70 percent market share, says a report by The Economic Times.
At present, Xiaomi is the top smartphone maker in India with 30 percent market share and user base of over 90 million.
The fate of homegrown companies has been uncertain since 2016 when they failed to launch 4G phones at affordable prices. Micromax, which in 2014 was the number 2 smartphone maker in India, has been wiped out of the market by the Chinese brands.
"The new PLI scheme balances out foreign and Indian players. The support of 6 percent is big and with the government support, we will be able to fight Chinese brands fiercely on the pricing front," Sharma said, adding that internal accruals are good for the plan and the company will raise money at the right time.
"Merely storing data locally doesn't solve the problem as companies can still use this data to train artificial intelligence and bots in China," Sharma added.
Industry body ICEA, which represents top mobile phone makers like Apple, Foxconn, Wistron, Lava, etc, said companies have committed investments worth Rs 11,000 crore under the PLI scheme and they will surpass manufacturing estimates by 2 to 2.5 times.
Major global players Samsung Wistron, Pegatron, Foxconn and Hon Hai and Indian companies such as Lava, Dixon, Micromax, Padget Electronics, Sojo, UTL and Optiemus have applied for benefits under the production-linked incentive (PLI) scheme.
The PLI scheme was introduced by the government in the electronics manufacturing segment on April 1 earlier this year, under the National Policy on Electronics (NPE) 2019 that aims to position India as a global hub for Electronics System Design and Manufacturing (ESDM).
Production-linked incentives are offered to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units.
An incentive of 4-6 percent is given to electronics companies that manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors, and nano-electronic components such as micro-electromechanical systems.
The PLI scheme for the mobile phone manufacturing segment will be active for five years, with FY2019-20 taken as the base year for calculation of incentives.Click here for Moneycontrol's coverage of the COVID-19 outbreak