In a significant move, the Union Cabinet has given the green light to an Rs. 17,000 crore incentive program aimed at enhancing the domestic production of IT hardware such as laptops and tablets. This initiative is projected to generate an additional production value of Rs. 3.35 lakh crore within a span of six years.
IT and Telecom Minister, Ashwini Vaishnaw, revealed that several high-volume sales companies have already expressed their interest in participating in the scheme. Notably, even Apple, the renowned iPad manufacturer, is reportedly evaluating the potential benefits offered by the program.
The Production Linked Incentive (PLI) Scheme 2.0 for IT hardware encompasses a wide range of devices, including laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices. While a similar scheme was introduced in 2021, it did not gain the expected momentum.
“For IT PLI, the budgetary outlay is Rs. 17,000 crore. The tenure of the program is six years… we will accept the 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 crores, and create incremental direct employment for 75,000 people during the six-year period, he added.
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 newly approved PLI scheme for IT hardware by the Union Cabinet, companies will receive a higher incentive of up to 5 percent, along with an optional 4 percent incentive if they utilize domestically-produced components. This is a significant increase compared to the 2 percent incentive offered under the previous scheme.
When asked about the companies showing interest in the scheme, Minister Ashwini Vaishnaw mentioned prominent names such as HP, Dell, Acer, and Asus, which have high sales volumes. He also mentioned that Apple, although operating in a niche market, is seriously considering the scheme. The government had earlier approved a PLI scheme for IT hardware in February 2021, with an allocation of Rs. 7,350 crores. However, industry players requested an increased outlay for the segment.
India is rapidly becoming a key player in the global electronics manufacturing ecosystem and is emerging as a major electronics manufacturing country. The eligibility of investments from Chinese companies under the PLI scheme was addressed by Minister Vaishnaw, stating that any company complying with the trusted source norms can invest under the scheme.
Minister of State for Electronics and IT, Rajeev Chandrasekhar, emphasized that the focus is now on expanding India’s electronics ecosystem beyond smartphone manufacturing. The new IT hardware PLI scheme aims to bolster India’s production capabilities and its position in the global value chains of IT hardware, including servers and laptops. The scheme is expected to contribute significantly to India’s goal of achieving a $1 trillion digital economy, with $300 billion in electronics manufacturing by 2025-26.
India has witnessed a robust 17 percent CAGR in electronics manufacturing over the past eight years, surpassing $105 billion worth of production this year. The PLI scheme, which initially focused on mobile phone production, has played a crucial role in boosting electronics manufacturing in the country. India has now become the world’s second-largest manufacturer of mobile phones, with mobile phone exports exceeding $11 billion in March.