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Lava to shift production from China to India, to invest Rs 800 crore

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In an impetus to Prime Minister Narendra Modi’s “Local ke liye Vocal” call, domestic brand Lava has announced to shift its entire mobile R&D, design and manufacturing for the export market from China to India within next six months, announcing to invest overall nearly Rs 800 crore in the due course of time.

Lava exports over 33 per cent of its phones to markets such as Mexico, Africa, Southeast Asia and West Asia.

As part of the transition, Lava will invest around Rs 80 crore this year and subsequently around Rs 800 crore over the next five years.

The move came after the Indian mobile phone manufacturers gained a significant cost advantage over China from the Production Linked Incentive Scheme (PLI) scheme announced by the government last month, the company said in a statement.

“We have been eagerly looking forward to an opportunity to shift our entire mobile R&D, design and manufacturing from China to India,” said Hari Om Rai, Chairman and Managing Director of Lava said.

“With the production linked incentives, our manufacturing disabilities for the world market would largely be met hence we plan to make this shift,” Rai added.

Lava currently follows a two-pronged strategy for its exports – one by selling phones under its brand name and another by manufacturing or customizing products for electronic companies.

The PLI scheme extends an incentive of 4 per cent to 6 per cent 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 as defined.

It was launched as the domestic electronics hardware manufacturing sector faces lack of a level playing field vis-a-vis competing nations.

According to the Ministry of Electronics and Information Technology (MeitY), the sector suffers disability of around 8.5 per cent to 11 per cent on account of lack of adequate infrastructure, domestic supply chain and logistics; high cost of finance; inadequate availability of quality power; limited design capabilities and focus on R&D by the industry; and inadequacies in skill development.

The domestic mobile brand Lava last week resumed production at its manufacturing facility in Noida with over 20 per cent production capacity.

Nearly 600 employees of its 3,000-strong workforce are now back at the factory after the company received an approval from the state authorities.

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