Government Considers Aligning Mobile PLI 2.0 with Rs 40,000 Crore Electronics Scheme to Enhance Localisation Efforts

Government Proposes Revised Production-Linked Incentive Scheme for Mobile Phones

The government's proposed production-linked incentive (PLI) 2.0 scheme for mobile phones may target domestic value addition of more than 55%, according to a recent Economic Times report.

The revised scheme, which is expected to be finalised soon, is being aligned with the existing Rs 40,000 crore Electronics Component Manufacturing Scheme (ECMS) to boost local sourcing of key smartphone components, officials told The Economic Times. This move comes after concerns raised by the finance ministry over India's continued dependence on imported high-value electronic components despite the success of the current PLI scheme in turning the country into a major smartphone manufacturing and export hub.

The Expenditure Finance Committee has asked the Ministry of Electronics and Information Technology (MeitY) to revisit certain aspects of the proposed scheme, particularly localisation targets and incentive structures. Officials told The Economic Times that the finance ministry favours a framework that links incentives more closely with local sourcing and backward integration instead of just incremental sales.

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The original PLI scheme for large-scale electronics manufacturing, launched in April 2020 with an outlay of Rs 40,995 crore, aimed to raise domestic value addition in mobile phones to 35-40%. However, government estimates suggest local value addition in large electronics stood at only 18-20% as of April this year.

MeitY officials pointed out that dependence on imported components such as display assemblies, camera modules, and chipsets has slowed localisation efforts, as these parts account for nearly 55-60% of a smartphone's bill of materials. The report added that companies manufacturing or sourcing critical components locally, including Li-ion batteries and display assemblies, may receive additional incentives under the updated scheme.

Several of the 75 manufacturing facilities approved under ECMS are expected to begin production later this year, which could accelerate localisation. The Centre plans to retain key elements of the current PLI scheme, under which 32 approved companies have exceeded initial investment, production, and export targets.

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