Page 75 - Nuvama | IC Report 2023

INDIA: THE 5D ADVANTAGE

To seize this opportunity, India has unveiled its flagship Production Linked Incentive (PLI) scheme.
The scheme offers incentives up to 5% of production on incurring fresh capex. Out of ~INR2 trillion of fiscal
resources dedicated to this scheme over five years and across various sectors, electronics accounts for
one–third. This clearly shows the government’s objective of making India an electronics hub.
Exhibit 7:
A breakdown of
India’s PLI allocations
- Electronics a
Electronics 36% top priority

Autos 14%
Renewables 13%

Pharma 12%

Chemicals 10%

Others 15%

Source: Investindia.gov.in, Nuvama research

The PLI scheme’s focus is not only on creating an ecosystem with increased domestic value addition;
it is also to put India higher on the global trade map by enabling it to become a large-scale exporter of
electronics. In fact, the PLI’s success in large measure depends on how exports scale up over the next
few years across schemes with export targets ranging from 13–80% of expected production.
Over the next five years, the GoI expects production worth INR12.1 trillion from the electronics
manufacturing schemes, out of which ~60% and ~37% are expected to come from exports of mobile
phones and IT hardware, respectively. Furthermore, domestic value addition is estimated to increase
from existing 15–20% in mobile phones to 35–40%, and in electronic components to 45–50%, This
clearly indicates a two-pronged strategy to catapult India to the ranks of global peers.

12,500 100 Exhibit 8:
83
Export
10,000 67 80 expectations from
60 key segments
INR bn 7,500 38 43 60

5,000 38 40 %
13
2,500 20
0
0 0
Electronics IT hardware Telecom White Goods Automobile Metals & Mining Pharma Textile
Expected production Export as % production (RHS)
Source: PIB.gov.in, Nuvama Research

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