Handset manufacturers stare at upto Rs 15,000 cr production loss amid lockdown NEW DELHI: The handset manufacturing industry is staring at close to Rs 15,000 crore in losses with production coming to a grinding halt, with the likes of Foxconn, Flex, Wistron who together make a bulk of the smartphones sold in India, closing operations amid the three-week nationwide lockdown, say government officials and industry.

“At present we have a turnover between Rs 500 crore and Rs 700 crore per day, so a shut down for about three weeks essentially means loss ranging between Rs 10,000 crore and Rs15,000 crore” Pankaj Mohindroo, chairman of Indian Cellular & Electronic Association of India (ICEA) told ET.

The association represents smartphone manufacturers such as Apple, Foxconn, Lava, Oppo & Vivo.

Foxconn, Flex and Wistron, three of the world’s topo contract manufacturers who are also the biggest in India, didn’t respond to ET’s emailed queries.

Government officials say the manufacturing industry would need to adopt models from Korea and Taiwan to emerge from this, once the situation comes close to normalcy.

Meanwhile, sources in the government also told ET that they were monitoring the halt in the manufacturing sector very closely and were in touch with all the electronic manufacturers.

“As and when the production starts, there will be a lot of rush at the ports, so we will intervene at that period to ensure smooth transition to resuming production on full scale,” the official added.

The official said that the government had just approved the mega Production Linked Incentive (PLI) scheme along with the two other schemes to give a fillip to electronic manufacturing in the country. “That is the silver lining in the dark clouds right now, as we know once the lockdown is lifted and we are past the Covid-19 phase, the entire stimulus from the government to boost electronic manufacturing will be in place for companies to avail”.

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On March 21, the Cabinet approved a Rs 48,000-crore package to boost smartphone manufacturing in the country. The bulk of the package – at close to Rs 41,000 crore – have been earmarked for the PLI scheme and balance is almost equally divided between the Scheme for Promotion of Manufacturing of Electronics Components and Semi-Conductors (SPECS) and the Electronic Manufacturing Cluster 2.0.

“We are currently working on the draft guidelines for these,” the official said, while clarifying that despite the halt in manufacturing, companies should be able to avail the benefits, especially of the PLI scheme.

The PLI scheme shall extend an incentive of 4% to 6% on incremental sales over base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of five years subsequent to the base year.

So, officials say, whatever loss in production happens right now will actually make it easier for the companies to make up in next few months.

“What is happening is that the baseline is getting depleted for the companies, in a way this helps them only. They have been, losing from January onwards. So, we expect them to be in full swing at least from August and only August 2020 to March 2021 production will be compared against August 2019 to March 2020 production,” the official said.



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