Government Mulls Extra Incentives for Firms Surpassing Mobile Phone PLI Targets

The government is reportedly evaluating options to increase incentives for companies that have surpassed their yearly production, sales, and export targets under the mobile phone PLI scheme.

Several companies have regularly achieved their production, sales, and export goals under the PLI scheme and are now requesting additional incentives to be provided swiftly as a "good faith" gesture, Economic Times reported citing a senior official.

“The decision on disbursement on production above the ceiling limit is pending at the empowered committee level. We are looking at how to approach this issue best and hope to arrive at a solution soon,” an official was quoted as saying by ET.

The PLI scheme, notified on 1 April 2020, offers companies a 4-6 per cent incentive on their additional sales over the base year.

Initially planned to last until 2024-25, the scheme was extended by one year to support companies that missed their production targets due to the disruptions caused by COVID-19 lockdowns.

Out of the 32 companies approved under the PLI scheme for mobile phone manufacturing, seven are new (greenfield) projects, while the remaining 25 are existing (brownfield) ones.

The firms manufacturing mobile phones under the PLI scheme are eligible to claim incentives a year after successfully meeting their production goals.

Companies that meet their production and sales targets receive a 6 per cent incentive in the first two years, which drops to 5 per cent in the third and fourth years, and 4 per cent in the fifth year.

The government had projected a production value of Rs 8.12 lakh crore over the five years of the mobile phone PLI scheme, with a target of Rs 4.39 lakh crore by March 2024.

As per internal government estimates, by March 2024, companies eligible for the PLI scheme surpassed the projected target, with total production reaching Rs 4.8 lakh crore.

For the current fiscal year, the government aims for a production value of Rs 6.50 lakh crore, with nearly 80 per cent of that target already met, according to government estimates.

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