PLI, A MIXED BAG

SOME SECTORS SUCH AS TELECOM, AUTO, IT AND PHARMA HAVE SHOWN ROBUST INVESTMENTS, BUT AN OVERALL FOCUS ON MANUFACTURING IS KEY.

- JOE C. MATHEW

TOWARDS END-MARCH, American consumer electronics giant Apple wanted the 30-hour customs clearance time at Chennai airport reduced to six hours. The company was racing against time as chartered flights to the U.S., loaded with iPhones, had to be flown out before April 9, the deadline U.S. President Donald Trump had set for levying a 26% additional tariff (as part of his global 'reciprocal tariff' agenda) on products made in India and exported to that country.

By the time Trump decided to exempt mobile phones and some electronics items from additional tax on April 12, Apple is estimated to have shipped about 1.5 million made-in-India iPhones to the U.S.

India’s transformation from a net importer of mobile phones to a net exporter has been phenomenal, largely because of a central government programme called the Production Linked Incentive (PLI) Scheme. Global contract electronic device manufacturers, including Foxconn and Wistron (now Tata Electronics), and home-grown Dixon Technologies were among the PLI beneficiaries that scaled up their domestic mobile phone production capabilities in recent years. In fact, India’s mobile phone production capacity grew from 58 million units in 2014-15 to 330 million units in 2023-24, with exports alone accounting for 50 million units. Imports decreased substantially while foreign direct investment (FDI) into the sector increased 254% during the period.

“Apple and Samsung alone accounted for around 94% of India’s smartphone exports. Both brands have significantly expanded their manufacturing in India to align with the country’s objective of reducing reliance on imports and strengthening its presence in the global supply chains. The Indian government's PLI scheme has encouraged global manufacturers to set up/expand their production facilities in the country. All this has resulted in increase in local manufacturing,” says a recent report by market research firm Counterpoint.