Mobile imports: PLI scheme has helped reduce India’s dependancy on China, says CRISIL report

The Indian government’s Phased Manufacturing Programme (PMP) and the Production Linked Incentive (PLI) schemes seem to be working for the mobile industry in the country. According to a new report from Credit Rating Information Services of India Limited (CRISIL), the production of mobile phones in India has taken a leap after the government introduced these schemes, reducing the country’s imports and dependency on China.
After logging a 33% compound annual growth rate (CAGR) between fiscals 2016 and 2021, domestic mobile production is estimated to have grown 24-26% in fiscal 2022. The report says that despite the ongoing chip shortage, three of the global manufacturers have met PLI production targets during the fiscal.
CRISIL Research expects the growth momentum in production to sustain, with a 22-26% CAGR between fiscals 2022 and 2024 to Rs 4.0-4.5 lakh crore in value terms. The growth is lilely to be led by the PLI scheme, which is in the second year for most players.
“As a corollary, the country’s mobile imports decreased ~33% on-year in fiscal 2022. Dependency on China reduced to 60% from 64% in fiscal 2021, and is expected to fall further in the medium term. However, with rising production, imports of electronic components essential for mobile assembling/manufacturing also increased 27% on-year,” claims the report.
What is PLI scheme
Production Linked Incentive Scheme (PLI) for large scale electronics manufacturing was announced in April 2020. It offers a production linked incentive to boost domestic manufacturing and attract investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units. The scheme aims to boost the electronics manufacturing landscape and establish India at the global level in electronics sector.
The scheme shall extend an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of 5 years subsequent to the base year as defined.