As many as 19 companies, global and local, have filed their application under the Production Linked Incentive Scheme (PLI) for IT hardware worth Rs 7,325 crore, which was notified according to a Ministry of Electronics and IT (MeitY) statement, on March 3, 2021.
The five foreign companies include Dell, Wistron, Rising Stars Hi-Tech (Foxconn), Flextronics, and Lava. In addition, 14 companies have filed applications under the domestic companies category which, according to Economic Times, include “Dixon, Infopower (JV of Sahasra and MiTAC), Bhagwati (Micromax), Syrma, Orbic, Neolync, Optiemus, Netweb, VVDN, Smile Electronics, Panache Digilife, HLBS, RDP Workstations, and Coconics.”
These companies are expected to expand their manufacturing activities in the country significantly and become national champions in the manufacture of IT hardware.
April 30, 2021, was the last date to file applications.
Union minister of telecom and IT, and Law and Justice Ravi Shankar Prasad termed the PLI scheme for IT hardware as a “huge success” in the context of the response from global and domestic companies engaged in manufacturing of electronics and hardware devices.
“We are optimistic and looking forward to building a strong ecosystem across the value chain and integrating with the global value chains, thereby strengthening the electronics manufacturing ecosystem in the country,” Prasad said in a statement.
According to the MeitY website, “The Target Segment under PLI shall include (i) Laptops (ii) Tablets (iii) All-in-One PCs and (iv) Servers”. It will offer an incentive of 1%-4% to companies considering FY 2019-20 as the base year.
According to the scheme guidelines, homegrown companies are required to invest Rs 20 crore and achieve incremental sales of Rs 50 crore, Rs 100 crore, Rs 200 crore, and Rs 300 crore in four successive years.
For global companies, required investment has been kept at Rs 500 crore and incremental sales targets are Rs 1,000 crore in the first year, Rs 2,500 crore in the second year, Rs 5,000 crore in the third year, and Rs 10,000 crore in the fourth year.
Over the next 4 years, the scheme is expected to create a production value of Rs 1,60,000 crore. Out of which, IT hardware has proposed production of over Rs 1,35,000 crore, and domestic companies have proposed production of over Rs 25,000 crore.
How Does It Help India?
The PLI scheme aims to enhance exports significantly. Out of the total production in the next 4 years, of Rs 1,60,000 crore, more than 37% will be contributed by exports of the order of Rs 60,000 crore, according to the release.
Additional investment in electronics manufacturing of about Rs 2,350 crore will be brought in by the scheme.
A very important plus point is the employment generation expected to be done by these companies. The scheme is expected to generate approximately 37,500 direct employment opportunities in the next 4 years along with the creation of additional indirect employment, according to the statement.
Domestic value addition is expected to grow almost three times from the current 5-12% to 16-35%.
India Cellular & Electronics Association (ICEA) Chairman Pankaj Mohindroo said: “This is a testimonial to India’s capacity to become the manufacturing hub for IT hardware. The world is looking at India as a destination to manufacture and participation in the scheme by the global companies are a resounding vote of confidence to the current government’s policies.”
ICEA is also delighted to see the emergence of the Indian champions a big step towards “Atmanirbhar Bharat”, he added.