Samsung Applies for Rs 900 crore Sops under PLI Handset Scheme

Samsung, the only one of 16 companies to have met its FY21 target under the production-linked incentive (PLI) scheme for handsets, has applied for the highest possible sops under the plan worth nearly Rs 900 crore, said a person directly aware of the matter.

“Samsung has hit the ceiling of Rs 15,000 crore worth of production of phones priced over Rs 15,000 (factory value) during the year (ended March 2021) and exported phones worth about Rs 13,850 crore,” the person said. The PLI scheme offers graded incentives, or cash backs, worth 6% of incremental sales of goods achieved over base year for the first two years each, 5% for the third and fourth year and 4% for the fifth year. The 6% cash back translates to Rs 900 crore for Samsung. To qualify for these, global companies such as Samsung must produce incremental goods worth Rs 4,000 crore, Rs 8,000 crore, Rs 15,000 crore, Rs 25,000 crore and Rs 50,000 crore in five successive years.

Other Applicants

This was later relaxed to any 5 years in the FY21-26 period.

According to the guidelines, the annual ceiling on incentives payable to each applicant is to be determined based on financial outlay and number of eligible applicants in each of the target segments. The total outlay for the first year for all the 16 applicants was fixed at Rs 5,334 crore.

Samsung India Electronics Ltd’s FY20 standalone net profit was Rs 2,902.30 crore on revenue of Rs 78,651.20 crore, as per data provided by business intelligence firm Tofler. The company gets around 70% of its India revenue, or around Rs 55,000 crore, from the mobile phone segment. The company’s India revenue from mobile phones for FY21 is also in the same range, said people aware of the matter.

Samsung did not respond to ET’s emailed queries.

Besides Samsung, India’s second-largest smartphone maker by shipments, the government approved Foxconn units Hon Hai and Rising Star, and iPhone makers Wistron and Pegatron to receive incentives for the segment for global companies. The rest of the approved applicants include homegrown companies such as Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics. India’s largest smartphone maker is China's Xiaomi.

Originally, the first year of production under the scheme was to be FY21, and it was to end in 2024-25. But the industry pushed the government for a year's extension since production had come to a grinding halt in 2020 because of the pandemic. The impact of the Covid-induced lockdowns meant all but Samsung missed out on meeting the most lucrative first-year targets.

The government acceded to the handset makers’ demand in July and allowed an extension of the scheme by a year, to 2025-26. The government allowed flexibility in choosing any five years out of the six — from FY21 to FY26 — to claim incentives, thereby allowing Samsung to claim sops for FY21. The others have chosen FY22 as their first year.