India's IT hardware PLI Scheme sees strong industry interest

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India's IT hardware PLI Scheme sees strong industry interest

India's IT hardware PLI Scheme sees strong industry interest

Industry News
Sep 04,23

Government officials announced that, out of the 40 companies that submitted applications for the Centre's revised production-linked incentive scheme for IT hardware, ten have already commenced production as of July 1, 2023. Additionally, 25 companies are planning to initiate manufacturing by April 1, 2024, while another five are expected to start operations by April 1, 2025.

The government anticipates a cumulative investment of Rs 5,010 crore from the pool of 40 applicants, which includes prominent global IT hardware firms like Dell and HP participating directly in the revised production-linked incentive scheme. Other key industry players such as HPE, Lenovo, Acer, ASUS, and Thomson are engaging in the program through electronics manufacturing services providers or contract manufacturers, including Flextronics and Rising Stars (a subsidiary of the Foxconn Technology Group in India).

Officials highlighted the involvement of Indian companies such as Padget (a Dixon Technologies subsidiary), VVDN, Netweb, Syrma, Optiemus Technologies, Sahasra, Neolync, Panache, Sojo (a unit of Lava mobiles), and Kaynes in the scheme. They noted that the scheme would gain momentum due to the robust IT services industry driving demand within the country.

It was emphasised that the scheme has received overwhelming interest. While the budgetary allocation stood at Rs 17,000 crore, applicants have projected a PLI amount totalling Rs 22,890 crore. These applicants also estimated a production figure of Rs 4.65 trillion, which includes exports worth Rs 28,288 crore, surpassing the targeted Rs 3.35 trillion.

Officials indicated that the selection of applicants would be finalised soon in accordance with the scheme guidelines, staying within the overall budgetary allocation of Rs 17,000 crore.

The six-year production-linked incentive (PLI) scheme for IT hardware, covering laptops, tablets, all-in-one personal computers, servers, and ultra-small form factor devices, aims to attract top hardware companies. Notably, Apple did not apply under the scheme, but one of its contract manufacturers, Foxconn (operating as Rising Stars Hi Tech), is among the 40 applicants. Government officials revealed ongoing discussions with Apple regarding the possibility of manufacturing iPads in India. Hewlett Packard Enterprise also recently announced a $1 billion investment in India for server production.

The second version of the scheme, introduced in May of this year, has received a more positive response compared to the initial one in 2021, which had a budget of approximately Rs 8,000 crore and saw limited participation from global players. The revised scheme offers a 5 per cent government incentive on net incremental sales, compared to the previous 2 per cent, over the base year. Companies can select the base year starting from FY23. Additionally, the scheme allows for a more flexible investment period of six years, as opposed to the previous four years. Companies opting for the scheme can also earn an additional optional incentive of 3 per cent if they utilise India-made and designed components, sub-systems, or inputs. Furthermore, companies can involve Indian contract manufacturers and receive incentives if these contractors exclusively produce for a single company. The scheme also permits investments from Chinese manufacturers in line with existing regulations.