Samsung to finally get its FY21 incentives under PLI scheme

The approval, granted after over two years, came after the smartphone major revised its claims as the government had found some discrepancies in the original paperwork.

“The claims for the first year have been approved and the amount is likely to be disbursed in a couple of weeks,” an official said.
The approved amount though is nearly half of the ₹900 crore that Samsung had initially filed for in August 2021, claiming to have achieved the target of ₹15,000 crore worth of incremental sales for FY21.

To claim the subsidy, Samsung had to produce handsets with a factory cost of more than $200 (roughly ₹15,000). However, the ministry of electronics and information technology (Meity) found some discrepancies in the company’s invoices and held back the incentives.

ET Bureau

While Samsung was the only company to have achieved the production targets in the first year of the PLI scheme, it is the last one to get the incentives due to the discrepancies and subsequent checks. Other global beneficiaries of the PLI scheme, the three contract manufacturers of Apple – Wistron, Pegatron and Foxconn – got the benefits for the first year long back.Officials said that Samsung was in the process of filing claims for the third year of the PLI scheme, or FY23, after failing to achieve the targets in the second year, FY22. A query sent to Samsung remained unanswered at the time of going to press.The smartphone PLI scheme offers graded incentives in the form of cashbacks at 6% of incremental sales of goods for each of the first two years, 5% for the third and fourth years, and 4% for the fifth year.

The overall financial outlay for the PLI scheme was reduced to ₹38,601 crore over five years from the original ₹40,951 crore. One of the reasons for the reduced outlay was that Pegatron would be claiming incentives for only four years of the scheme tenure.

The company started manufacturing from April 1, 2022 (FY23), which meant that it had to forgo benefits for one year.

To qualify for benefits, global firms like Samsung and Apple’s contract manufacturers need to invest a minimum of ₹250 crore in the first year of the scheme and a similar amount in each of the next three years. In terms of production, the global companies need to manufacture incremental goods (mobile phones with invoice value of ₹15,000 and above) worth ₹4,000 crore, ₹8,000 crore, ₹15,000 crore, ₹25,000 crore and ₹ 50,000 crore in the final year of the scheme.

The scheme commenced in FY21 but was amended after most beneficiaries failed to meet the targets in the first year, barring Samsung. The scheme tenure was extended to six years, but the condition was that companies could claim benefits for five years of their choice.