On May 13, 2020, Prime Minister Narendra Modi delivered a national address , where he spoke of the economic challenges facing India due to the COVID-19 pandemic and unveiled a substantial economic package worth ₹20 lakh crore to rejuvenate the Indian economy. Prime Minister Narendra Modi called upon the citizens to participate in the mission of building a self-reliant India, often referred to as an "Aatma Nirbhar" nation, by not only supporting local businesses but also by actively promoting them. PM Modi remarked “When India speaks of self-reliance it does not speak of self-centred system,In India’s self-reliance there is a concern for the whole world’s happiness, cooperation and peace”.
To give necessary thrust on Aatmanirbhar Bharat, the government had allocated Rs 1.97 lakh crore for in the Union Budget 2021-22 across 14 sectors. The primary goal of was to enhance India's manufacturing capabilities and boost exports.
As of September 2023, the Production-Linked Incentive (PLI) schemes for 14 sectors, such as electronics, telecommunication, pharma, white goods, and textiles, have successfully attracted investments totalling over Rs 1 lakh crore.
The Commerce and Industry Ministry disclosed that, until November 2023, 746 applications had been approved under these schemes.
PLI units have been established in more than 150 districts across 24 states. The ministry highlighted that these schemes have resulted in direct and indirect employment for over 6.4 lakh individuals, contributing to production/sales amounting to Rs 7.80 lakh crore.
In the fiscal year 2022-23, incentives worth approximately Rs 2,900 crore have been disbursed. The statement also emphasised a 20% increase in mobile manufacturing over the past three years, with notable achievements in import substitution in the telecom and pharma sectors.
Within the white goods sector, 64 companies have been selected under the PLI scheme. Among them, 34 companies have invested Rs 5,429 crore in air conditioner components, and 30 companies have invested Rs 1,337 crore in LED component manufacturing.
Furthermore, the scheme is anticipated to attract additional investments of Rs 6,766 crore, creating an additional 48,000 jobs. Notably, 13 foreign companies are expected to invest Rs 2,090 crore in this endeavour.
One of the key success stories of the PLI scheme has been the production shift by Apple from China.
In a notable achievement for the Modi government's "Make in India" initiative and the Production-Linked Incentive (PLI) scheme, Apple has successfully assembled iPhones with a freight-on-board (FOB) value surpassing Rs 60,000 crore in the initial seven months of the fiscal year 2023-24 (FY24) through its India-based suppliers.
This accomplishment represents 81% of their combined target of Rs 74,000 crore, a requirement under the PLI scheme for mobile devices in FY24. Notably, 70% of this achievement is attributed to iPhone exports from India. The data is sourced from Apple's three vendors - Foxconn, Pegatron, and Wistron (now owned by Tatas) - provided to both the Centre and state governments, and as reported by Business Standard.
The Free On Board (FOB) value, including the ex-factory cost and additional expenses like transportation and warehousing, has shown impressive performance. Based on current trends, the three suppliers are projected to reach an FOB value of Rs 90,000 crore to Rs 1 lakh crore in iPhone production by the end of FY24. This represents a substantial increase of 20 to 35% compared to their commitments under the PLI scheme.
If the three vendors achieve this goal, they would comfortably surpass the FOB value target of Rs 92,526 crore for FY25. Looking ahead, the aim for the fifth year is to reach Rs 1.09 lakh crore, facilitating Apple's plan to shift 18-20% of its iPhone production to India by FY26.
In the first seven months of FY24, the three vendors achieved an FOB value closely matching Apple's entire FY23 performance, totalling Rs. 62,000 crore. Even in the second year of operations, Apple exceeded its commitment under the scheme, producing iPhones with an FOB value of Rs 47,000 crore against the committed Rs 62,000 crore.
The significant surge in the FOB value of iPhone production this year is attributed to a substantial increase in iPhone exports from India. Exports reached $5 billion (Rs 41,700 crore) in the initial seven months of FY24, marking a remarkable 177% growth year-on-year. In comparison, during the same period last year, iPhone exports from India amounted to only $1.8 billion.
Consequently, Apple's share in the total exports of mobile devices from India has seen a substantial rise, increasing from 45% in FY23 to 62.5% within the initial seven months of FY24. This positive trend has prompted the government to set ambitious targets, with Communications Minister Ashwani Vaishnaw announcing a goal of reaching $15 billion in mobile device exports from India and an overall production value of $50 billion within the country by the end of the financial year 2024.
What has also worked for the PLI, as an external factor, is the slowdown in the Chinese economy, which has increased labour costs and left many manufacturers worried about the ambiguity in policy making, as witnessed during the Covid-zero lockdowns.
Modi Government’s Production Linked Incentive (PLI) scheme had its origins in the Covid-19 pandemic, as India finally aimed for atma nirbharta in the manufacturing sector. Contrary to what some critics have been claiming, the PLI programme is critical in ushering a manufacturing ecosystem in the country, which will also help micro, small, and medium enterprises in the long run. From assembling in the first stage, the country will soon be a key player in the manufacturing of components, thus integrating it in the global supply chain and consequently, the economy.
