How a new subsidy plan hopes to build an Indian smartphone brand, Pg21

Key Highlights:

• The Union Cabinet approved a new Rs 62,500 crore mobile phone manufacturing scheme.
• The scheme aims to foster the development of Indian smartphone brands, moving beyond mere assembly.
• It provides an additional 3% incentive for design and R&D activities by Indian brands.
• The initiative focuses on boosting local sourcing, domestic value addition, and smartphone exports.
• This five-year scheme is a follow-on to the existing Production Linked Incentive (PLI) scheme for smartphone assembly.

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Detailed Insights:

• The new scheme addresses the gap where India manufactures most smartphones sold domestically but lacks prominent Indian brands.
• It seeks to bridge the initial cost disadvantage faced by Indian brands against established global competitors, particularly from China.
• The government's objective is to enable Indian companies to move deeper into the value chain, encompassing product design, research and development, and intellectual property.
• This push is crucial for achieving technological sovereignty and capturing a greater share of the economic value generated by the electronics sector.
• While the initial PLI scheme successfully attracted global manufacturers and boosted production, it did not create Indian smartphone brands of comparable scale.
• The scheme intends to strengthen domestic supply chains and enhance global competitiveness through incentives linked to eligible mobile phone sales.

Key Concepts Involved:

• Production Linked Incentive (PLI) Scheme: A government initiative offering incentives on incremental sales to manufacturers for products made in India.
• Technological Sovereignty: A nation's capacity to develop, control, and utilize its own technology independently, reducing reliance on foreign entities.
• Value Chain: The complete sequence of activities involved in bringing a product or service from its initial conception to its final delivery to consumers.