PLI 2.0: India Targets 55% Domestic Value Addition in Mobile Manufacturing

India is intensifying its focus on domestic smartphone production with an updated Production-Linked Incentive (PLI) scheme, dubbed PLI 2.0, aiming to increase domestic value addition to more than 55%.  

This move is part of a broader effort to reduce dependency on imported high-value components. 

PLI 2.0 Scheme Objectives 

PLI 2.0 is expected soon and looks to align closely with the existing ₹40,000 crore Electronic Component Manufacturing Scheme (ECMS).  

The objective is to significantly boost local sourcing of crucial components, thereby reducing reliance on imports.  

Concerns were raised by the finance ministry regarding the current high-value component imports, which even though the PLI scheme has markedly increased India's smartphone assembly and export capabilities, still require attention. 

Concerns Over Import Dependence and Proposed Changes 

The Expenditure Finance Committee has suggested revisiting certain aspects of PLI 2.0, advocating stronger provisions for deeper domestic value addition. The goal is greater integration with the local component ecosystem.  

Although the PLI scheme launched in April 2020 aimed to boost local value addition to 35-40% for mobile phones, progress has been slower than anticipated, primarily due to continued import dependence on display assemblies, camera modules, and main chipsets, forming 55-60% of a smartphone's bill of materials. 

Revised Incentive Framework and Component Localisation 

Officials have indicated that the finance ministry supports a calibrated incentive structure that more closely ties payouts to local sourcing and backward integration.  

The revised approach is designed to work in tandem with ECMS to foster a more integrated electronics supply chain.  

Under the updated PLI scheme, companies producing or sourcing critical components like Li-ion batteries and display assemblies domestically are likely to benefit from additional incentives. 

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Investment and Production Achievements 

India's push for self-reliance in smartphone production has already seen significant achievements.  

The 32 approved companies under the current PLI scheme have exceeded initial targets, achieving cumulative investments of ₹17,519 crore, production valued at ₹11.01 lakh crore, and exports amounting to ₹6.27 lakh crore. 

Conclusion 

India's update to the Production-Linked Incentive scheme with PLI 2.0 sets ambitious targets for increasing domestic value addition in smartphone manufacturing. By integrating with the Electronic Component Manufacturing Scheme, India aims for a more autonomous electronics supply chain and reduced reliance on imports. 

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