## Big PLI Impact: Local Production of Electronics Parts Gets a Boost; Imports of Completely Boxed Smartphones Drop by 40%
India’s electronics manufacturing industry is witnessing a significant surge in local production, leading to a substantial decline in imports of key components like mechanics, vibrator motors, charger adapters, and plastic parts. According to data from the commerce ministry, imports of fully assembled electronics, including smartphones, have dropped by 40% from April to January FY 2023-24.
Government’s PLI Scheme Spurs Local Manufacturing
The growth in local production, particularly in the smartphone sector, has been significantly aided by the government’s Production Linked Incentive (PLI) scheme. This scheme provides incentives to manufacturers who source components locally, encouraging them to set up manufacturing facilities in India.
Imports of Plastic Parts, Mechanical Components Decline
Imports of plastic parts, including back covers, GSM antennas, and camera lenses for smartphones, have witnessed a notable decline of 33% in volume and 26.5% in value during the first 10 months of FY24. Similarly, imports of mechanical parts, such as vibrator motors and screws, have also seen a decrease in both volume and value.
Reduced Import Duty Boosts Competitiveness
The government’s recent decision to reduce import duty on components from 15% to 10% in the Union Budget aims to further boost the competitiveness of local manufacturing. This move is expected to encourage domestic production and reduce the reliance on imports.
Charger Adapter Imports Drop, Value Edges Up
Imports of charger adapters have seen a significant 72% decline in volume from April to January 2024 compared to FY23. However, their value has witnessed a slight increase of 1.3%. Market analysts attribute this to chargers accounting for approximately 2.5% of the total production cost of mobile phones.
High-Value Components Still Imported
While there has been a surge in local production, higher-value components such as camera modules, display assemblies, and battery packs are still being imported in larger quantities. This highlights the need to enhance local value addition for improved export competitiveness.
Exports Soar, iPhone Exports Dominate
In the first nine months of the fiscal year, India’s electronics exports have surged by 22.24%, surpassing the $20 billion mark. This growth is primarily driven by robust smartphone exports by leading brands like Apple and Samsung. Notably, iPhone exports alone accounted for $7 billion in December 2023, representing 35% of total electronics exports.
Conclusion
The PLI scheme has significantly boosted local electronics production in India, leading to a reduction in imports and an increase in exports. As the government continues to support domestic manufacturing, the industry is poised for further growth and innovation, ultimately making India a global hub for electronics manufacturing.