India Needs ‘National Semiconductor Mission’, Revamp of PLI Scheme for Smartphones, IT Hardware: Industry tells govt

SemiconductorIndia needs to create a ‘National Semiconductor Mission’ as the “world needs India in this field,” top companies and industry bodies told the government on Wednesday. They added that the performance-linked incentive (PLI) scheme for smartphones needs to revamp and requires course correction if the country is to achieve $300 billion target in electronics manufacturing by 2025-26.
The suggestions emerged in presentations made before senior government ministers at the ongoing ‘Azadi Ka Digital Mahotsav’ after heads of several firms debated on how India can achieve its big aim. “As much as we are chasing the semiconductor business, the World needs India for semiconductors. The semiconductor industry needs India. Promote it boldly. Creating the National Semiconductor mission should be a mission,” the presentation said, which was reviewed by News18.
Senior functionaries from Vedanta Group, Intel India, Tata Electronics, NXP and IESA were part of the discussion on the roadmap for the superconductor industry. “Government should throw the challenge back to the industry and associations that are advising the government. Google, Amazon, Facebook are all getting into chips. Throw the challenge back to the Industry to create that next processor. A lot of opportunities in the market. Think global. It is different from what we are used to doing. Taking lot more risks. The timing is right,” the presentation mentioned.
Revamp PLI Scheme for Smartphones, IT
Telecom and IT hardware Industry leaders told the government in another session that a “well-crafted, well-suited and regularly monitored PLI” was needed for both sectors, terming it a pillar to reach $300 billion target by 2025-26. “PLI is the most significant driver by a mile towards $300 billion. Smartphone PLI needs quarterly review and course correction. The ease of doing business will be a critical element. IT hardware PLI needs to be revamped from the ground upward. PLI needs to aim for ‘shifting’ production, not expanding unlike mobiles,” the industry leaders said in the presentation.
Top representatives from Apple, Lava, ICEA, MAIT, Dixon and Flex participated in this discussion and asked the Ministry of IT and Electronics (MeiTY), DPIIT and NITI Aayog to decide PLI financials with Finance Ministry playing a supporting role.
“We need to focus on mobile phones as a priority sector to achieve $300 bn by 2026. The highest projected exports are from $3.6 bn in 2020-21 to $55 bn in 2025-26 – a 15-time rise,” they said. The industry honchos said exports are key to achieving the $300 billion target and the country needs to snatch global market share.
“Business as usual will get us to $100-110 billion max by 2026. The domestic market is critical but even the best results won’t get us close to $300 billion. Exports play a key role in reaching $300 billion. Mobile production is 5% of global value production and 15% of volume while IT hardware production is 0.5% of global production – both grossly inadequate to achieve $300 billion,” according to the presentation.
The industry leaders pointed out that tariffs will be critical to cost competitiveness and a matching and stable tariff regime must be decided by industry and MeitY as the low and stable tariff was important.
“Tariffs may be a disability. High tariffs perpetuate imports, not restrict imports. Tariffs in effect amount to a tax on exports. Tariff reduction are advised on inputs to 0 or at best 5 percent. The highest tariffs are within electronics. Tariffs may neutralize the benefit of supportive policies. Increase in India’s tariffs in 2020 and 2021 raised costs by around 4-5 percent. High and stiff tariffs discourage value addition. Tariff hikes are likely to reduce output/investment by 8 percent, employment by 9 percent and exports by 31 percent. Tariffs introduce instability,” the presentation mentioned.
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