Officials of MeitY against request of a rollover of the first year’s production targets for companies that have been selected under the PLI scheme

In spite of a request of a rollover of the first year’s production targets for companies which have been selected under the production-linked incentive (PLI) scheme for domestic mobile manufacturing, the initial view of the ministry of electronics and information technology (MeitY) is against it.

Officials of the said ministry are of the view that rolling over the targets may not be possible because the same was approved by the Cabinet and any change whatsoever may need the Cabinet’s approval. Further, since some of the companies like Samsung that has been selected under the scheme would be able to meet their production targets by March 2021, granting approval to some others which may miss the targets would be according to a case-to-case treatment and this would be against policy principles.

However, since there’s an empowered committee which is monitoring the PLI scheme, it may at some stage consider the request for a rollover and make a recommendation to the government but so far no such decision has been taken.

The empowered committee (EC) is an inter-ministerial body which has the power to revise incentive rates, target segments, ceilings, and eligibility criteria of the PLI scheme for handsets. It includes the NITI Aayog CEO along with the secretaries of departments of economic affairs, expenditure, revenue, MeitY, department for promotion of industry and internal trade (DPIIT) and the directorate general of foreign trade (DGFT).

As reported earlier, the proposal for the rollover of production targets was submitted to MeitY by the industry body, India Cellular Electronics Association (ICEA) of which Samsung is not a member.

The reason cited by ICEA for the rollover is stuck supplies of components and travel restrictions due to suspension of international flights, etc which have delayed production by the new units.

The proposal for rollover is for those units which have met their investment targets but due to such reasons beyond their control are not able to meet their production targets for March 2021.

Though not cited in the letter, industry sources said a major reason for the delay in production is the delay in issuing of visas to Chinese engineers and technicians who are required to set up the new units here. Since most of the units are shifting from China, the units can be set up only by Chinese engineers. The Indian embassy in Beijing is now fast-tracking such visa requests.

“The PLI applicants are working randomly with everything possible at their command to fulfil the targets. Many of them will be able to complete it, but not before early FY21-22 and a handful will even be able to complete by March 2021.

However, they are running from hope against hope because there could be many slips in these extraordinary circumstances. Most companies have exhibited sincerity by ensuring that they have either already or will try and complete their investment targets by March 2021. Clearly, if investments are completed, there is no reason for the companies to hold back production. This itself is sufficient ground to appreciate that all PLI participants have approached the scheme in good faith and the shortfall in production targets for FY21 are purely a result of supply constraint.

The ICEA’s proposal is that applicants who complete the investment target before March 31, 2021 would have established their seriousness and commitment and therefore must be rewarded. It has said such applicants who have met investment targets and achieved base production should be given the PLI on incremental production irrespective of whether they have met the incremental turnover target for the FY20-21 or not. This will mean a lower outflow from the budget allocated for PLI during the current year and by adjusting the target.