A Bank of America report states that the Indian government’s production-linked incentive (PLI) scheme for mobile phones might prompt Apple to move about 18% of its global iPhone production to India by 2025.
What Happened? The report suggests that if the larger scale entices Apple’s suppliers to also expand in India, Apple might even increase its production.
The PLI scheme could potentially help India triple its domestic production to $126 billion (₹10,37,044 crore) and multiply its exports by five times to $55 billion (₹4,52,678 crore) by 2026.
The report highlighted that mobile phones constitute 21.5% of India’s electronics demand and grow at a rate of 15% annually.
However, the scheme has faced criticism for the low local value addition of 18% in production, compared to 38% in China and 24% in Vietnam.
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Despite the difficulties in localising 70% of a mobile phone’s cost, including display, memory and other semiconductors, due to high capital expenditure and advanced technology requirements, the scheme has improved the export mix in local production from 16% to 25%.
Boosting exports: India consumed electronic goods worth $158 billion (₹13,00,438 crore) in 2023, mainly met by imports, contributing to a trade deficit of $77 billion (₹6,33,749 crore).
Yet, the PLI scheme could aid in reducing imports and boosting exports, improving the macroeconomic outlook, reducing the current account deficit by $112 billion (₹9,21,817 crore) over five years, stabilizing foreign exchange, and promoting growth for capital expenditure, credit, and the logistics sector.
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