Only 2 to 3 company’s under the PLI scheme to meet their target due to global supply chain issues

Only two or three of the 14 enterprises eligible for the production-linked incentive (PLI) plan for IT hardware are anticipated to reach their first-year targets for the fiscal year ending…

By Nivedita Bangari

March 30, 2022

2 min read

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Only two or three of the 14 enterprises eligible for the production-linked incentive (PLI) plan for IT hardware are anticipated to reach their first-year targets for the fiscal year ending March 31. Some companies blamed insufficient sops under the scheme, while others blamed their local production aspirations on ongoing global supply chain difficulties and chip shortages.

Several persons familiar with the subject told ET that Dell, one of the global applicants, and Micromax, through Bhagwati Products Ltd, are likely to reach the first-year requirements. Dixon Technologies may also “scrape through” to fulfil the first-year goal, according to a source familiar with the situation.

The government announced the hardware PLI scheme on March 3, 2021, with a Rs 7,350 crore incentive fund and 14 companies picked. Dell, ICT (Wistron), Flextronics, and Bharat FIH — formerly known as Rising Stars Hi-Tech (Foxconn) — were among the global firms that produced laptops, tablets, all-in-one personal computers (PCs), and servers. Ten firms were accepted in the domestic category: Lava, Dixon Technologies, Info power Technologies (a joint venture between Sahasra and MiTAC), Bhagwati (Micromax), Neolync, Optiemus, Netweb, Smile Electronics, VVDN, and Panache Digilife.

To be eligible for the first-year incentive of 4% cash back, international enterprises must have net incremental sales of Rs 1,000 crore, while local companies must have net incremental sales of Rs 50 crore.

The companies have requested a more than tripling of the total incentive corpus to around Rs 20,000 crore, as well as an increase in the average incentive rate from 2.3 per cent to 5 per cent, through industry bodies India Cellular & Electronics Association (ICEA) and Manufacturers Association for Information Technology (MAIT). They claim that the benefits do not compensate for the disadvantages of relocating duty-free products like laptops, tablets, and data servers from China, Taiwan, and Vietnam to India.

However, Mohindroo stated that all attempts are being made to energise Global Value Chains (GVCs) such as Apple, HP, Dell, and Acer, among others, to turn India into a global manufacturing powerhouse with output exceeding $30 billion by 2026.

The existing parameters of the programme, according to MAIT president Nitin Kunkolienkar, are not incentivizing electronic hardware manufacture in the country, and more needs to be done. Supply chain problems, according to another domestic company that will miss its yearly objective for the first time, are contributing to the industry’s woes.