Introduction
The government is formulating a new version of its production linked incentive (PLI) scheme focused on promoting domestic electronics components manufacturing in India. This signals sustained policy support for the sector.
Analysis for a layman
India met 99% of its mobile phone demand through local factories. But most components are still imported. PLI schemes provide incentives for manufacturing firms to ‘Make in India‘. The proposed SPECS 2.0 aims to incentivize component makers from resistors to semiconductors to set up base in India. This will raise local value addition and exports competitiveness.
)
Original Analysis
The planned PLI expansion highlights government intent to build comprehensive electronics supply chains locally. Having tapped handset assembly, focus now shifts further back the value chain towards integrated component production. Success here is crucial for economies of scale and cost competitiveness. The move aligns with geopolitical shifts encouraging supply chain localization. But execution challenges remain in talent availability, logistics infrastructure for scheme effectiveness.
Impact on Retail Investors
For investors, the continued policy thrust at boosting domestic manufacturing presents opportunities to benefit from India’s electronic system design and manufacturing (ESDM) ambitions. Stocks of contract manufacturers like Dixon, Amber, Syrma SGS and component plays like VVDN Technologies, SCL etc. stand to directly gain. However, investors need realistic expectations regarding timeline for true supply chain maturity. Near term upside may be capped amid global growth risks.
Impact on Industries
The scheme aims for 35-40% electronics supply chain integration domestically from 10-15% currently. If achieved, crucial industries from telecom, auto, healthcare gain from reliable component supply chains reducing import dependence. MSME ancillary industries also benefit. But execution, cost challenges exist. Critical scale is still years away.
Companies that will gain
Dixon Tech, Syrma SGS, VVDN Technologies
Companies that will lose
Foxconn, Flex
Conclusion
The proposed electronics PLI scheme extension reinforces policy commitment, signaling rising supply chain localization. But India still has a long path towards supply chain self-reliance. Investors can tap electronics manufacturing bets but need patience for true competitiveness.
Citation
PTI. “‘Electronic Parts Mfg Scheme 2.0 in Works’.” Economic Times, 12 December