NOIDA, INDIA – Lava International is reportedly considering a spinoff of its production arm into a separate company, which may generate business from other handset brands and help meet targets under the production-linked incentive scheme for smartphones.

The contract manufacturer, which has not been able to meet its PLI smartphone targets since the scheme began in 2020-21, is hopeful of a turnaround in its manufacturing fortunes with the upcoming incentive package for component production, head of manufacturing Sanjeev Agarwal, told The Economic Times.

“Lava’s performance in the ongoing PLI scheme is an internal concern, and we are working on plans to bridge the gap,” he said.

Agarwal said the company could spin off the manufacturing arm to make it independent, but it has not yet made a decision.

He said the company's failure to meet smartphone PLI targets starts with a higher base that made incremental targets more difficult for Lava than others who started their manufacturing journey with the onset of the scheme. The company also could not benefit from the Indian government’s push towards Chinese smartphone brands working with PLI-eligible domestic firms for meeting local demand and exports, as rival brands have policies in place to not partner with manufacturers who also operate their own brand, Agarwal said.

Lava also plans to start localizing more components after starting with printed circuit board assembly, ET reported.

"Now we are seeing which other components we need to focus on from the bill of materials. This will be based upon technology and capital requirements — which ones to do in-house and which components to outsource, that’s what we are working on," Agarwal said.

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