Cabinet approves Rs7,350-cr PLI Scheme for laptops, tablets, PCs and servers
26 February 2021
The union cabinet has approved a Production Linked Incentive (PLI) Scheme for IT hardware, in order to attract large investments in the value chain of IT hardware and boost domestic manufacturing.
The scheme, involving a total outlay of Rs7,350 crore over a four-year period, targets segments including laptops, tablets, all-in-one PCs and servers.
The scheme shall, extend an incentive of 4 per cent to 2 per cent / 1 per cent on net incremental sales (over base year, ie, 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four years.
The scheme is likely to benefit five major global players and 10 domestic champions in the field of IT hardware manufacturing, including laptops, tablets, all-in-one PCs, and servers. This is an important segment to promote manufacturing under ``AtmaNirbhar Bharat’ as there is huge import reliance for these items at present.
The total cost of the proposed scheme is approximately Rs7,350 crore over four years, which includes an incentive outlay of Rs7,325 crore and administrative charges of Rs25 crore.
The scheme will enhance the development of electronics ecosystem in the country and help position the country as a global hub for electronics system design and manufacturing (ESDM) on account of integration with global value chains, thereby becoming a destination for IT hardware exports.
The scheme has an employment generation potential of over 1,80,000 (direct and indirect) over four years.
The scheme will provide impetus to domestic value addition for IT hardware, which is expected to rise to 20-25 per cent by 2025.
At present, the laptop and tablet demand in India is largely met through imports, valued at $4.21 billion and $0.41 billion respectively in 2019-20. The market for IT hardware is dominated by 6-7 companies globally, which account for about 70 per cent of the world's market share. These companies are able to exploit large economies of scale to compete in global markets. It is imperative that these companies expand their operations in India and make it a major destination for manufacturing of IT hardware.
Given the current global scenario, the world of manufacturing is undergoing a paradigm shift. Manufacturing companies across the globe are looking to diversify their manufacturing locations to mitigate the risk involved in depending on a single market.