Science & Tech

Deliberation on India’s Smartphone Manufacturing Dreams

  • A recent spat between former RBI governor Raghuram Rajan and Minister of State for Electronics Rajeev Chandrasekhar exposed diverging views on the efficacy of a Central government effort aimed at boosting Indian electronics manufacturing.
  • The debate is around whether the system actually encourages self-sufficiency and robust manufacturing or merely creates low-level assembly employment that rely on imports.

A Critical Examination of the PLI Scheme

  • Intentions of the Government: Around five years ago, India set out on a mission to revitalise domestic manufacturing as a pillar of economic growth.
  • Dual Approach: To boost manufacturing, the government used a twin policy of increasing import levies (the’stick’) and offering incentives (the ‘carrot’). The Production-Linked Incentive (PLI) plan evolved as a crucial component, providing financial assistance to enterprises engaged in domestic production.

Concerns and Triumphs

  • Concentration on Smartphone Manufacturing: Among several industries, smartphone manufacturing stood out as an early adopter of the PLI plan.
  • PLI’s Impact on Smartphone Exports and Imports: The programme produced outstanding results, with mobile phone exports increasing from $300 million in FY2018 to a staggering $11 billion in FY23. Furthermore, mobile phone imports fell from $3.6 billion in FY2018 to $1.6 billion in FY23.

Examining Criticism

  • Rising Imports of Components: The spike in imports of mobile phone components such as display screens, batteries, cameras, and printed circuit boards between FY21 and FY23 is a major source of controversy.
  • The critique questions the common notion of localised production, claiming that manufacturers mostly assemble imported components.


  • Diverse Component Uses: In response to the allegation, the response asserts that imported components, such as screens and batteries, could be used in businesses other than mobile phones.
  • Partial PLI Implementation: According to the response, the PLI scheme supports just about 22% of mobile production in India.
  • Clarification of Import Dependency: It is emphasised that not all imports are used in the production of mobile phones.

Disagreement in the Middle

  • One critical viewpoint emphasises that even if a fraction of imports are utilised for production, India’s net exports remain negative.
  • The Point of Disagreement: The crux of the argument is whether the PLI programme would deliver long-term job development and improve India’s manufacturing prowess to include value-added products.

@the end

  • The lively conversation captures the complexities of India’s electronics manufacturing strategy.
  • While both sides give strong arguments, one fundamental question remains: Can the PLI programme actually promote long-term job prospects and propel India to become a centre of value-added manufacturing?
  • Striking the correct balance between rewarding domestic manufacturing and investing in broad socioeconomic growth remains a tough challenge as India sets its economic future.
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