PLI scheme to help India create a complete mobile supply chain in next 3 years: Samsung

San Jose (US): India will establish a complete supply chain for mobile production in the next three years driven by the production-linked incentive (PLI) scheme, just like China built its global supply chain years ago, and then, the growth will truly be led by the industry, Samsung India President and CEO J.B. Park said on Thursday.

In 2021, the Indian government had announced an outlay of Rs 1.97 lakh crore for the PLI schemes for 13 key sectors, including mobile manufacturing.

The minimum production in India as a result of PLI schemes is expected to be over $500 billion in 5 years. Of the $101 billion electronics production in FY23, smartphones constituted $44 billion.

According to the government, the PLI scheme for smartphone manufacturing has resulted in local value addition of 20 per cent within a span of two-three years.

According to Park, the country still has about three years to further boost mobile exports from the country and enable several brands to be eligible for the PLI scheme.

"This kind of policy that the government has given to the brands to come and build not only for domestic usage but also for exports, these kinds of incentives are very important to pivot the target that needs to be achieved," Park told reporters here.

He said that in the next three years, "a complete mobile supply chain will be established in India", just like China that built their global supply chain years ago.

"After three years when all of the sub-supplier supply chains are established, I think the growth engine will be industry-led instead of government policy-led. It is the actual development that occurs with such initiatives," Park noted.

The PLI scheme has attracted over Rs 1.03 lakh crore of investment (till November 2023), according to the Ministry of Commerce and Industry.

The biggest impact of the PLI scheme is seen in mobile phone manufacturing as PLI beneficiaries, which account for about 20 per cent of the market share, contributed to about 82 per cent of mobile phone exports during FY 2022-23.

"Production of mobile phones increased by more than 125 per cent and export of mobile phones increased around 4 times since FY 2020-21," according to the ministry. Manufacturing of various electronic components like batteries, chargers, printed circuit boards, camera modules, passive components and certain mechanics have been localised in the country.

Green shoots in the component ecosystem have emerged with large companies such as Tatas entering component manufacturing. The PLI scheme has made Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global value chain.

According to Park, India has around 250 million feature phone users and they will eventually migrate to smartphones and, in five to 10 years of AI time-frame, they will again upgrade to the next level of device.

"The more than 650 million-smartphone base will start to increase as we will see more shifts of feature phone users happening to smartphones in India," he said.

With the new Galaxy S24 series, Samsung has heralded the ‘AI phone’ era and AI-driven features will need to go local in order to address the needs of the masses.

"With brilliant engineers in India, we are already making the experiences local for our consumers. We will develop more local use cases adaptive to the users with AI," said Park.