Indian Government’s Iconic PLI Scheme attracts global brands to India

What is the PLI Scheme?

The Indian government has implemented the Production Linked Incentive (PLI) schemes as a significant step towards boosting domestic manufacturing, attracting investments, and promoting self-reliance in key industries. This is a major scheme from Indian Government that is aimed towards Atmanirbhar Bharat and Make in India initiative.

With an outlay of INR 1.97 lakh crores, the PLI schemes span across 14 key sectors, aiming to create national manufacturing champions, generate 60 lakh new jobs, and achieve additional production worth 30 lakh crores over the next five years

Apple & Samsung pursue local manufacturing interests in India

To build a robust Supply chain network, companies like Apple and Samsung want to shift their manufacturing out of China and into emerging markets such as India and Vietnam.

The reason for this shift is, during covid crisis these companies were severely impacted due to their over dependency on China and thus leading to supply chain shortages. It will be immensely challenging to move the entire manufacturing set up from China to India, but it will be a persistent and gradual shift.

Apple has leveraged the the PLI schemes and more than 70 percent iPhones in India were locally manufactured in 2022, up from less than 40 percent in 2020.

Foxconn which is the largest supplier of Apple, is planning to set up two new manufacturing facilities in Telangana and Bengaluru.

New Semiconductor Plant worth Rs. 1.5 Lakh Crores is being set up in Gujarat under PLI scheme

Today 90% of the semiconductor market is controlled by Taiwan. Its a monopoly that Taiwan enjoys but post the pandemic all the corporations realized how dependent they on Taiwan for semiconductor supply, which is also in constant border conflict with China.

Hence, India has emerged as an opportunity. Government of India has announced a massive $10 billion (~Rs.82,000 crores) incentive for the semiconductor industry & government will bear nearly 50% of the setup cost for manufacturing facility.

Leveraging of this opportunity Indian conglomerate Vedanta and electronic giant Foxconn has finalized to set up their Rs.1.5 Lakh Crore semiconductor plant in Gujarat. The Centre will be providing 50% subsidy on the total cost of this project.

Conclusion

This is just the start of global conglomerates coming and setting up shop in India. This will have a far reaching impact on India and act as a catalyst to boost the Small and Medium sector enterprises in India which will become local suppliers to these conglomerates.

Sensing these opportunities, Niveshaay has created a smallcase to play on this emerging structural theme catering to various Indian competitive sectors that aim to benefit from the PLI boost.

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