Some smart(phone) lessons for industrial policy, Pg13

Key Highlights:

• The Production-Linked Incentive (PLI) scheme for smartphones, launched in early 2020, has driven $64 billion in production by FY2025 from a $1.2 billion investment.
• Smartphone exports have increased from $3.1 billion to $24 billion, raising India's global share from 1% to 8%.
• The Electronics Component Manufacturing Scheme (ECMS) has received applications worth twice the expected investment of Rs 59,350 crore, with 1.4 lakh jobs committed.
• The smartphone PLI's success is attributed to its export focus, emphasis on downstream assembly, and reduction of import duties on key inputs.

Detailed Insights:

• The smartphone PLI scheme targeted phones with an invoice value above Rs 15,000 for exports and cheaper phones for the domestic market, plugging India into global value chains.
• Focusing on downstream assemblers like Foxconn, Pegatron, and Wistron created jobs, generated demand for components, and anchored supplier ecosystems.
• The Apple network alone includes over 40 companies in India, generating another 1,20,000 direct jobs, with potential for further growth through ECMS.
• Reduction of duties on inputs like printed circuit board assemblies and camera modules, along with addressing administrative bottlenecks, built investor confidence.
• The smartphone PLI's success provides a template for redesigning PLIs in sectors like textiles and telecom, focusing on exports, labor strengths, and ease of doing business.

Key Concepts Involved:

• Production-Linked Incentive (PLI) Scheme: A scheme that provides financial incentives to companies based on incremental sales from products manufactured in domestic units.
• Downstream Manufacturing: The final stages of production, such as assembly and packaging, closer to the end consumer.
• Ease of Doing Business: A business environment with simplified regulations and processes, promoting efficiency and investment.