Samsung won't get incentive for smartphone production in FY22

The company though is in the process of filing claims for the third year (FY23), they said, indicating it had met the targets for that period.

This means Samsung would miss out on incentives for FY22, potentially worth around ‘900 crore. The development also implies that the company will get cashbacks for only four years instead of the five years it could have under the scheme.

“Samsung has not filed for claims for the second year, which means it has not met the targets,” an official said on the condition of anonymity.

Recently, the government approved cashbacks of around ‘500 crore for Samsung for meeting targets for the first year of the scheme, after the company revised its claims.

The smartphone PLI plan offers 4-6% incentives to companies for five years.An email sent to Samsung seeking comment remained unanswered at the time of going to press on Wednesday.Samsung was the only one to have met the targets in the first year (FY21) out of the 10 global and local companies that were selected under the five-year scheme. Since a majority of the companies failed to meet the targets amid Covid-led disruptions in FY21, the scheme was extended by 1 year, with a provision that allows companies to claim benefits for five years of their choice.

The government had realised that most of the companies, including suppliers of Apple, were starting afresh and faced supply-chain constraints due to the Covid pandemic. Samsung, in contrast, was already manufacturing in the country and was able to expand easily during the period.

ET Bureau

Thus, Samsung is in the fourth year of the PLI scheme while all other global players such as iPhone makers Foxconn, Wistron (its facility is now owned by the Tata Group) and Pegatron are in the third year. The 3 iPhone makers have been far exceeding the targets since they started claiming benefits from FY22. For meeting the targets in the first year of the scheme, Samsung will get around ‘500 crore. The approved amount though falls way short 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 in FY21.

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