Smartphones

Government delays PLI operations for smartphone makers; conducts further review of claims by Samsung, Telecom News, ET Telecom

Government delays PLI operations for smartphone makers;  conducts further review of claims by Samsung, Telecom News, ET Telecom

New Delhi: The government has delayed issuing sops for smartphone makers that have met their targets under the Production Linked Incentive (PLI) scheme amid closer scrutiny of invoices issued by the South Korean manufacturer Samsung Electronics, people familiar with the matter said.

“There were errors in the invoices submitted by Samsung,” one of the people told ET on condition of anonymity. “This led to more thorough checks, and therefore the release (of the incentives) was delayed.”

Samsung Electronics did not respond to ET’s email inquiries until press time.

A company executive, who did not wish to be identified, said the government was being cautious and checking the numbers to make sure everything was in line, as this would be the first incentive payout in the framework of the program.

Another industry executive said a “billing issue” was being looked into by the government.

Besides Samsung Electronics, foreign majors Hon Hi (Foxconn) and Wistron as well as Indian contractors Dixon Technologies and UTL Neolyncs have also qualified for incentives under the program and are awaiting news from the Ministry of Electronics and Technology. information technology (MeitY). Taiwanese contractors Hon Hi (Foxconn) and Wistron manufacture Apple’s iPhones in India, while Samsung manufactures its own smartphones.

The Rs 41,000 crore handset PLI scheme involves incentives in the form of investment-based cash payments and targeted production increases. The program offers graduated incentives in the form of cash back at 6% of incremental sales of goods for the first two years each, 5% for the third and fourth years, and 4% for the fifth year.

To qualify, foreign companies had to invest Rs 250 crore each and produce an additional output of Rs 4,000 crore in the first year and Rs 8,000 crore in the second, to obtain direct incentives of 6% in the form of cash back. To get the same incentives, Indian handset makers had to invest Rs 50 crore each for Rs 500 crore of additional production.

Samsung Electronics was the only company to meet production targets for 2020-21. For Dixon, Hon Hi (Foxconn), Wistron and UTL, the first year was 2021-22, which was the second year for Samsung Electronics.

Pankaj Mohindroo, president of the India Cellular & Electronics Association (ICEA), told ET that the first year of PLI requires auditing systems to be in place. “Therefore, there is a bit of a delay,” he said.

Dixon Technologies Chairman Sunil Vachani said his company was awaiting comments from the Ministry of Electronics and Computers. “I think the empowered committee needs to meet and make a decision on this. We are awaiting instructions now”.

Sudhir Hasija, president of UTL Neolyncs, said the company is currently busy with paperwork to apply for incentives.

Queries sent by ET to Hon Hi and Wistron elicited no response.

The combined PLI program is aimed at making India a more attractive manufacturing destination and away from base companies such as China and Vietnam. The Center seeks to make the country a global manufacturing hub, with an export target of $100 billion over the next five years.