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Ex-RBI Governor Raghuram Rajan cautions over growing mobile phone exports boosted by assembly, not manufacturing

Updated: May 30, 2023 02:50:00pm
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Ex-RBI Governor Raghuram Rajan cautions over growing mobile phone exports boosted by assembly, not manufacturing

New Delhi, May 30 (KNN) India’s thriving mobile phone exports is primarily driven by assembly rather than genuine manufacturing within the country, said Former Reserve Bank of India (RBI) Governor Raghuram Rajan on Monday.

Expressing concern about it, Rajan said in a social media post said that the reason behind this could be a deficiency in the flagship Production Linked Incentive Scheme (PLI) scheme.

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“One key deficiency of the scheme is that the subsidy is paid only for finishing the phone in India, not on how much value is added by manufacturing in India,” he said.

Cautioning the country, the former governor added that very little apart from assembly is done in India, though manufacturers claim they intend to do more in the future.

“So India still imports much of what goes into the mobile phone, and when we correct for that, it is very hard to maintain that net exports have gone up,” he added.

The PLI scheme, introduced by the Indian government in early 2020, entices manufacturers - both domestic and foreign-owned - with a subsidy of 6 per cent of a phone’s invoice price for each additional unit produced in India, gradually decreasing to 4 per cent over five years, Rajan argued. 

He called for a careful assessment of the PLI scheme, encompassing an evaluation of job creation and value addition in India, emphasizing the importance of data-driven decision-making.  (KNN Bureau)

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