Samsung Electronics, a leading global electronics manufacturer, may not receive the incentives promised under India’s production-linked incentive (PLI) scheme for smartphone manufacturing in its inaugural year. The Ministry of Electronics and Information Technology (MeitY) discovered discrepancies in Samsung’s invoices, leading to the withholding of the payout. However, Samsung has stated that it is engaged in advanced discussions with the government to resolve the issue.
Samsung, recently reclaiming its position as India’s largest smartphone brand, confirmed ongoing discussions with the government regarding the matter. While the incentives for the first year are unlikely to be recovered, Samsung has rectified its billing, and the incentive payouts for the second year of the PLI scheme, starting from the fiscal year 2022, will commence soon.
The PLI scheme requires companies to make investments and achieve incremental sales targets to qualify for incentives. Companies such as Foxconn, Wistron, and Dixon Technologies have already received their incentives for the fiscal year 2022. Samsung’s case highlights the challenges faced by global companies in meeting the incentive targets due to disruptions caused by the COVID-19 pandemic and subsequent lockdowns.
The mobile handset PLI scheme, launched in 2020, offers graded incentives based on incremental sales achieved over the base year. Samsung’s 6% cashback amounts to Rs 900 crore. To be eligible for the incentives, global companies must make investments and produce incremental goods worth specified amounts over five consecutive years.
Despite the setbacks, Samsung’s strategy of manufacturing high-value phones in India and outsourcing lower-segment phones to contract manufacturers enabled the company to achieve its targets in the first year. Other global and Indian companies have also been approved for incentives under the PLI scheme.
Overall, while Samsung may not receive the incentives for the first year, ongoing discussions with the government indicate efforts to resolve the issue, and the company remains committed to manufacturing smartphones in India.
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