The Union Cabinet on Wednesday approved a Rs. 17,000 crore incentive to boost local manufacturing of IT hardware like tablets and laptops, and the scheme is projected to generate an incremental production worth Rs. 3.35 lakh crore over a period of six years.
IT and Telecom Minister Ashwini Vaishnaw said that companies having high volume sales are interested, and iPad maker Apple is also seriously evaluating the scheme.
The Production Linked Incentive (PLI) Scheme 2.0 for IT hardware covers laptops, tablets, all-in-one PCs, servers and ultra-small form factor devices. The scheme was introduced earlier in 2021 but did not get the expected traction.
“For IT PLI, the budgetary outlay is Rs. 17,000 crore. The tenure of the program is six years… we will accept first set of applications by October,” Vaishnaw told reporters after the Cabinet meeting.
The scheme is expected to lead to incremental production of Rs. 3.35 lakh crore, incremental investment of Rs. 2,430 crore and create incremental direct employment for 75,000 people during the six-year period, he said.
Further, Vaishnaw said that investments under various PLI schemes, especially those for telecom and mobile phones, have been higher compared to the government estimates.
Under the new scheme, companies will get an incentive of up to 5 percent and an optional incentive of 4 percent if they use domestically-produced components compared to just 2 percent incentive offered under the old scheme.
To a question about which companies are interested in the scheme, Vaishnaw said, “those who have high volumes. You know their names — HP, Dell, Acerand Asus have high volumes. apple is niche. They are also very seriously evaluating it.” In February 2021, the government approved the PLI scheme for IT hardware, covering the production of laptops, tablets, All-in-One PCs and servers with an outlay of Rs. 7,350 crore.
However, industry players had requested the government to enhance outlay for the segment.
The global electronics manufacturing ecosystem is coming to India, and it is emerging as a major electronics manufacturing country, the minister said.
When asked about the eligibility of investment from Chinese companies under the scheme, Vaishnaw said there is the well-defined trusted source norms in the country and any company that complies with the rules can invest under PLI Scheme 2.0 for IT hardware.
Minister of State for Electronics and IT Rajeev Chandrasekhar said that after the successes in building a rapidly growing and world’s second largest base and a trusted base for smartphone manufacturing, the focus is now on broadening and deepening India’s electronics ecosystem.
“Today’s Cabinet approval of IT hardware PLI 2.0 is focussed on expanding India’s production and presence in global value chains of IT hardware, servers, laptops,” he said.
He also said the scheme will play a key role in catalysing India’s techade and in achieving $1 trillion digital economy goal, including $300 billion of electronics manufacturing by 2025-26.
Electronics manufacturing in the country has witnessed a 17 percent Compound Annual Growth Rate (CAGR) in the last eight years to cross $105 billion worth of production this year.
The PLI scheme, launched in April 2020 with a focus on mobile phone production, has given a massive boost to electronics manufacturing in the country.
India has become the world’s second-largest manufacturer of mobile phones. Exports of mobile phones crossed $11 billion in March.
