Apple, Samsung may manufacture handsets worth $5 billion in FY22
By MYBRANDBOOK
According to reports, Apple and Samsung are set to locally manufacture smartphones worth around $5billion (₹ 37,000 crore) in FY22 under the government's flagship production-linked incentive (PLI) scheme, exceeding the target set by the Centre by over 50%.
Of this, mobile phone exports under the scheme will account for around $2 billion in FY22. The global companies are expected to exceed their targets this year and we expect the numbers to keep improving each year.
The PLI scheme for handsets promises incentives of nearly ₹39,000 crore spread over five years. PLI was the first and the largest in a series of such schemes launched by the government to make India a manufacturing hub, aiming to wean away manufacturers mainly from China.
Samsung, Apple's three contract manufacturers - Pegatron, Foxconn's Hon Hai and Wistron, along with another Foxconn unit Rising Star (now Bharat FIH) - were the five applicants chosen under the PLI scheme for smartphone production in the global manufacturers' segment.
An official said the government's target under the scheme for FY22 was close to $3.2 billion for the qualifying applicants.
Pegatron, Apple's second-largest global manufacturer after Foxconn, is expected to start manufacturing operations in India in the coming few months. Bharat FIH, on its part, currently makes smartphones mainly for China's Xiaomi. Since the per unit cost of manufacturing these devices is less than Rs 15,000, the company doesn't qualify for incentives under the PLI scheme.
Samsung is availing the incentives for the second year. This means it has to produce phones worth ₹8,000 crore over what the company produced in 2019-20 (the base year fixed by the government) in the ₹15,000 and above handset category. For Apple's contract manufacturers, this is the first year, implying that the Taiwanese manufacturers need to produce smartphones worth ₹4,000 crore each in the same category over their production in 2019-20 to avail the incentives.
The rate of incentives for the first two years is 6%, 5% for third and fourth, and 4% for fifth year. This means the government will pay 6% of the company's cost of production as incentive if it meets the target in the second year and 5% in the third and fourth year and 4% if it does so in the fifth year.
The threshold of production targets - to qualify for incentives - set over the base year is ₹4,000 crore in the first year, ₹8,000 crore in second, ₹15,000 crore in third, ₹20,000 crore in fourth and ₹25,000 crore in the fifth year.
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