Dixon Technologies shares surged by 7% following the government's announcement of a new mobile phone manufacturing scheme. The scheme, set to be detailed in an administrative notification within the next fortnight, aims to enhance India's competitiveness in the global smartphone market by incentivizing domestic sourcing, design, and R&D.
The new scheme, distinct from the previous production-linked incentive (PLI) program that ended on March 31, will span five years. It offers incentives ranging from 2.25% to 5% for eligible sales, with additional incentives of 1.5% for domestic sourcing of key components and 3% for building an Indian brand with its own design and R&D. The government anticipates that the scheme will boost domestic value addition in smartphones to 40-45% by the end of the scheme, up from the current 24%.
The scheme is projected to result in cumulative mobile-phone production of Rs 39 lakh crore and exports of Rs 15 lakh crore, creating approximately 600,000 new direct jobs. This follows the previous PLI scheme, which facilitated production worth Rs 22 lakh crore and exports exceeding Rs 7.5 lakh crore, generating 1.2 million jobs.
“The government's conditionalities for incentives are aligned with the industry's perspective which focuses on building scale, making India globally competitive, and owning intellectual property.”
Atul Lall, Managing Director at Dixon Technologies
In a related development, Dixon Technologies is expected to benefit from recent customs duty concessions on electronics manufacturing components, which are likely to reduce input costs and support the company's expansion in mobile and electronics manufacturing.
Last week, Vivo Mobile India received government approval for a joint venture with Dixon, where Dixon will hold 51% of the share capital. This venture is expected to bolster Dixon's manufacturing capacity, with Emkay raising its Vivo production estimates to 6.5 million units in FY27 and 18 million units in FY28.
Background
Dixon Technologies' strategic moves and the government's supportive policies are set to significantly impact India's electronics manufacturing landscape. The previous PLI scheme had already laid the groundwork by boosting production and exports, and the new scheme aims to further enhance these achievements.
With the new scheme and joint venture with Vivo, Dixon is poised to strengthen its market leadership and expand its manufacturing capabilities. The industry will closely watch the implementation of these initiatives and their impact on India's position in the global electronics market.
