The Government of India is dropping clauses including the evaluation of plant and machinery to be brought from China and South Korea. These were mainly opposed by Apple. It paves way for the company, and others including Foxconn, Samsung, OPPO, Vivo, and more to increase local production using the product-linked incentive (PLI) scheme.
Recently, many companies have been looking to shift parts of their production to more-competitive Asian countries, like Vietnam, Cambodia, and Thailand. In light of the constantly-developing and changing economic climate in China, the step has been taken in a vow to attract more US investment. It makes India more attractive as a partner in the so-called “China plus one strategy”.
Other amendments to PLI rules include lowering the excessive amount of business information the government previously required beneficiaries to share and clauses permitting the Empowered committee to unilaterally change investor rules.
For reference, PLI is an incentive of 4% to 6% on incremental sales (over base year) of goods manufactured in India, covered under target segments, for a period of five years.
If the manufacturers want to benefit from the said incentive, they will have to produce high-end phones (with freight on board value of more than $200) of more than INR 4,000 crore (1 crore is INR 10,000,000) for the base year. It will have to be followed by INR 8,000 crore, 15,000 crores, 20,000 crores, and 25,000 crores, for the next four years, respectively.
Apple is said to benefit from the new PLI conditions as its contract manufacturers Wistron and Foxconn could soon be shifting a significant portion of iPhone production to India.