The federal government in India has changed the production-related incentive scheme (PLI) to allow producers to switch to India on a large scale. This step is expected to pave the way for Apple, Samsung, Foxconn, Oppo, and Vivo, to play a greater role in local production.
According to news reports at The Economic Times“The empowered secretary committee met on Friday and decided to remove the clause, which evaluates factories and machinery brought to India at 40 percent of its value, and has approved several other changes so manufacturing can move to India in a big way.”
Other amendments to the PLI rules include reducing the amount of excessive business information previously requested by beneficiaries to be shared and clauses that allow the Empowered Committee to change investor rules unilaterally.
All eyes are on Apple
While Apple is reportedly interested in moving some of its production to India, Apple has doubts over some of the clauses in the PLI scheme. This premium smartphone manufacturer wants to shift production through its contractors such as Foxconn, Wistron and Pegatron. And changing the PLI scheme will be a big attraction for that.
Apple manufactures the iPhone 7 and iPhone XR in India, while the iPhone SE and iPhone 6S, which were also produced here, have been discontinued from Apple’s global product portfolio.
In an earlier report last month, a government official was quoted as saying: “We expect Apple to produce up to $ 40 billion in smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, utilizing the benefits under production-related incentive (PLI) schemes.”
The PLI scheme is an incentive from 4% to 6% on increasing sales of goods produced in India for a period of five years. If the manufacturer intends to take advantage of these incentives, they must produce high-end mobile phones of more than Rs 4,000 crore for the base year. This must be followed by Rs 8,000 crore, Rs 15,000 crore, Rs 20,000 crore, and Rs 25,000 crore, each for the next four years.
This will be a very wise decision by Apple if implemented … Apple’s tech giant is considering shifting most of its manufacturing from China to India. IPhone makers are considering producing smartphones worth up to $ 40 billion over the next five years …May 31, 2020
Apples ride in India
Apple itself is quite gung-ho in India. Earlier this year, CEO Tim Cook confirmed that Apple would open its first branded retail store in the country in 2021. Until now, Apple has a third-party retail outlet to sell its devices in India.
According to a report by International Data Corporation (IDC) earlier this month, Apple took a 75.6% market share in the Indian premium smartphone market in the last quarter.
Appreciation for Apple’s impressive performance flowed to iPhone 11’s strong sales and price cuts on the iPhone XR due to local production, which made it the best-selling iPhone in the country for Q2 and Q3 in 2019.
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