Indian Handset Makers Struggle To Meet PLI Targets; Apple Leads The Game

The majority of Indian handset companies are unlikely to meet production and sales-related targets that come with the government's production-linked incentive (PLI) scheme, Financial Express (FE) has reported. This comes when global smartphone manufacturers such as Apple and Samsung have been successfully meeting their targets.

The government selected five local manufacturers for the PLI scheme. So far, the report said only two of them, namely Dixon-owned Padget Electronics and UTL Neolyncs, were able to meet the targets in FY22. UTL is the manufacturer of the JioPhone Next. Lava International, Bhagwati (Micromax), and local contract manufacturer Optiemus have so far been unable to meet the targets.

Furthermore, UTL met its targets due to the JioPhone Next, which sold well after its release in November 2021. However, experts said sales declined as consumers started buying smartphones with better features.

To claim the scheme's benefits, companies like Lava, Bhagwati (Micromax) and others are planning to work as electronic manufacturing services (EMS), meaning they can facilitate manufacturing for other brands and claim the associated incentives, the report added.

Quoting experts, FE added that "We should not expect the domestic players to grow when the mass market is witnessing weakness." Senior analyst, Prachir Singh of Counterpoint Research, said, "We see Lava in a prime position to make a comeback." Apart from this, no other domestic brand is seeing growth."

However, industry experts are sceptical about the success of such arrangements, given that companies like Xiaomi, Realme, etc., will have trust issues since these domestic players are also in the business of making smartphones.

According to data available on Counterpoint, Lava's smartphone shipments grew 86 per cent year-on-year to over 900,000 units. At the same time, sales for Micromax fell 80 per cent year-on-year to over 100,000 units last year.