Consultants Review Team

The Indian government's adoption of Production Linked Incentive (PLI) schemes in the IT hardware sector is a significant step towards increasing local production. The Minister for Electronics and Information, Ashwini Vaishnaw, said that 27 enterprises had received approval.

Vaishnaw stated that 23 of the authorized enterprises are ready to begin production operations immediately, while the remaining four will begin within the next 90 days. This initiative is expected to pump a stunning Rs 3,000 crore into the industry, creating direct jobs for 50,000 people and indirect jobs for 150,000 more.

Previously, 40 companies applied for the IT hardware PLI scheme, including industry titans Dell, HP, and Lenovo. During the scheme's duration, they have committed to producing personal computers, laptops, tablets, servers, and other equipment worth Rs 4.65 lakh crore.

Dell, Foxconn, HP, Lenovo Flextronics, VVDL, Neolink, Bhagwati, Netweb, Sahasra, ILP, and Optimus are among the recognised firms, indicating a diversified consortium of manufacturers entering this transformative period. Vaishnaw further guaranteed that organizations that have not yet been approved are actively evaluating the programme and will join the initiative soon.

This monumental step began in May, when the Cabinet approved a redesigned IT gear PLI scheme for Rs 17,000 crore. This six-year project aims to boost domestic manufacture in laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices. It is expected to generate an additional production of Rs 3.35 lakh crore and provide approximately 200,000 job opportunities. In contrast to the former plan, which paid incentives of up to 2% of net sales for domestically manufactured goods, the updated version significantly increases the baseline incentive to more than 5%.

Furthermore, the redesigned program intends to stimulate local manufacturing of smaller components in computing equipment. It accomplishes this by providing additional incentives, up to 3%, to enterprises that purchase domestically produced components such as memory chips, printed circuit board assemblies, solid-state drives, chassis, power supply components, and adaptors.

According to the Ministry of Electronics and Information Technology (MeitY), the industry is facing challenges, with a setback of approximately 8.5% to 11% due to inadequate infrastructure, domestic supply chain and logistics, high financial costs, power quality limitations, limited industry focus on R&D, and skill development gaps. The primary purpose of the National Policy on Electronics 2019 (NPE 2019) is to position India as a world leader in Electronics System Design and Manufacturing (ESDM). This strategy aims to nurture local capabilities in developing fundamental components, to create an environment that allows the industry to compete strongly in the world arena.