PLI Scheme Extension Provides A Breather But Electronics Supply Woes Persist

Two companies availed the first-year incentive by meeting investment and sales criteria, a government official told BloombergQuint on the condition of anonymity as details are not public. South Korea’s Samsung Group was one of them.

Automakers to consumer electronics were badly hit by the shortage of chips that control everything from speed to power. Disruptions in production increased freight costs, delayed shipments.

In FY21, nobody will be meeting the thresholds because of the supply-chain constraints on display and microprocessors, Atul B Lall, chief executive officer at Dixon Technologies Ltd., had said during the company’s investor call in February.

Citing the same issues, Sanjeev Agarwal, chief manufacturing officer at Lava International, said, “We all had demanded to extend the PLI.”

According to Tarun Pathak, research director at Counterpoint Research, companies are able to source only around 12% of their components from within the country and depend on imports for the rest. “If everything goes as planned with pandemic driven demand, including pent-up demand, the extension could give the much-needed push to the industry to scale immediately, and localise further.”

Supply crunch persists for mobile phone makers. The lead time for procurement, Pathak said, is up four to fivefold and the prices have jumped 15-20% for certain components.

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