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IT Min rejects demands, to not extend first year PLI deadline

The PLI scheme for mobile, allied components and certain other specified electronic component was announced in April 2020, with incentives of 4-6 per cent.

Written by Aashish Aryan | New Delhi |
Updated: February 23, 2021 8:20:42 am
Union Minister for Information and Technology Ravi Shankar Prasad. (File)

THE MINISTRY of Electronics and Information Technology has decided to not extend the deadline for first year of production-linked incentive (PLI) scheme for mobile phone and allied component manufacturing, senior government officials told The Indian Express.

“The scheme is very clear in its targets from Day One. There was no ambiguity, as it is in the scheme, so there is no question of rolling over the deadlines or pushing the start of the PLI (scheme) for one year,” a senior official said.

Any decision to extend beyond the schedule that was announced in April 2020 will be taken only after the scheme has completed its initial target of 5 years, the official quoted above said. The PLI scheme for mobile, allied components and certain other specified electronic component was announced in April 2020, with incentives of 4-6 per cent. The scheme envisaged incentives for companies on achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes, with FY20 considered as base year for calculation of incentives.

For the first year, the total incentive to be given has been capped at Rs 5,334 crore, while for the second and third year it has been kept at Rs 8,064 and Rs 8,425 crore, respectively. In the fourth year, the incentive will be hiked substantially to Rs 11,488 crore, while in the fifth and final year, the incentive to be distributed has been capped at Rs 7,640 crore. The total incentives over five years has, thus, been kept at Rs 40,951 crore.

Last December, Apple’s contract manufacturers Wistron and Foxconn, and others such as Samsung, along with some domestic companies, approached the government asking it to roll-over milestones for the first year.

These companies had, in their meeting with senior officials from the IT Ministry, cited lack of timely approvals for land acquisition deals for new factories, absence of adequately trained workforce and lack of demand in the market due to the Covid-induced slowdown.

Based on industry representations, the IT Ministry, in January, started meetings with NITI Aayog, Finance Ministry and other relevant departments. IT Ministry officials had also met members of the empowered finance committee (EFC) to consider the option of pushing the deadline.

The EFC, headed by NITI Aayog CEO Amitabh Kant, also has the secretaries of the Departments of Economic Affairs, Expenditure, Revenue, Department for Promotion of Industry and Internal Trade, MeitY as well as the Directorate General of Foreign Trade. Officials from all relevant departments, however, came to the conclusion that the scheme should be run as it is for now, and reviewed only after the completion of initial schedule of 5 years.

Meanwhile, the details of incentives and other benefits for a PLI scheme for laptops, iPads, all-in-one desktops, and servers have been finalised by the IT Ministry and will soon be presented to the Cabinet for its approval, officials said. “Once we get approval from the Cabinet and other relevant departments, we will be rolling out the scheme,” the official said, declining to comment on total amount of incentives for the scheme.

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