Reaching out to the ministry of electronics and IT through seperate meetings, they said without the proposed changes, applicants may be discouraged from taking up the scheme and investing in the country. They said the changes are needed to avoid a situation mobile phone manufacturers found themselves in, with only one of 16 handset companies achieving the target for FY21 even after making timely investments.
The companies said the government must keep in mind global supply chain difficulties and India’s coronavirus crisis before setting ambitious output timelines for making laptops, tablets and servers, according to people familiar with the matter.
“PLI was conceptualised by the government in the pre-Covid era… but now there is a serious need to relook the scheme. The target should be revised or instead of four years we should be given five years to qualify for incentives,” said Nitin Kunkolienker, president of the Manufacturers’ Association for Information Technology.
He said the scheme is a two-way partnership between the government and the industry. The government would be the larger beneficiary, with 60% of the gains by way of foreign exchange, tax and non-tax revenue, employment, economic activity and social sector benefits.
“The idea is not to prove that industry is failing to achieve, the idea is to prove that the government ensures the industry succeeds in leading this revolution,” he said.
Queries sent to HP, Samsung and Wistron did not elicit any response till press time. Dell and Rising Stars (Foxconn) declined to comment.
All but one of the first batch of 16 PLI companies that were approved to make mobile phones in October failed to meet their production targets for the first year ended March 31, 2021.
Apart from Samsung, the other companies have been asking the ministry to declare FY21 as a zero year because Covid-19-led restrictions delayed the setting up of production lines.
Other industry associations have also put forward the industry’s concerns, but the final decision on the matter rests with an empowered committee.
The ministry notified the scheme for laptops, tablets, PCs and servers in March, offering incentives worth Rs 7,325 crore to be disbursed over four years to five global and 10 domestic companies.
As per the guidelines, foreign companies must invest Rs 500 crore and achieve incremental sales of Rs 1,000 crore in the first year, Rs 2,500 crore in the second, Rs 5,000 crore in the third, and Rs 10,000 crore in the last year.
For domestic firms, the investment target is Rs 20 crore, while the incremental sales targets are Rs 50 crore, Rs 100 crore, Rs 200 crore and Rs 300 crore in four successive years.
The government also set a value addition criterion beginning in the second year, when companies must start assembling printed circuit boards in India. The following year, they must add battery packs and in the fourth year, the manufacture of power adaptors or cabinets/chassis/enclosures must be localised.
Upon meeting all these criteria, the companies will receive an incentive of 1%-4% on incremental sales over the base year FY20. The last date for applications is April 31.
The market for laptops in India was about 7.5 million units in 2019-20, valued at Rs 33,950 crore, while for tablets it was 2.4 million units valued at Rs 3,500 crore, according to International Data Corporation. The market for servers was 200,000 units worth Rs 9,100 crore. Almost 90% of this demand was met by imports.
“India’s personal computer penetration at 15 per 1,000 people is significantly lower compared to the US (784 for 1,000 people) and China (41 per 1,000 people), and thus presents significant growth opportunities,” according to the official scheme document.