The Government of India has approved Production Linked Incentive (PLI) Scheme for the IT Hardware sector, which includes include laptops, tablets, all-in-one PCs and servers. The decision was passed by the Union Cabinet chaired by the Prime Minister, Narendra Modi, to boost domestic manufacturing and attract large investments in the value chain of IT Hardware.
“The compound annual growth rate (CAGR) of electronic manufacturing is 23%. In 2014-15, India’s electronic manufacturing was Rs 1,90,366 crore which increased to Rs 5,46,550 crore in 2019-20. We want to make India a global hub of electronic manufacturing,” said Ravi Shankar Prasad, Union Minister, Communications, Electronics & Information Technology, Government of India while announcing the decision.
The Scheme shall extend an incentive of 4% to 2% / 1% on net incremental sales (over base year i.e. 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years. “PLI scheme in IT hardware is expected to lead the total production of Rs 3,26,000 crore by 5 global champions which contribute 50% towards world’s market and 10 national champions. 75% of this production will be for export,” he added.
The total cost of the proposed scheme is approximately Rs 7,350 crore over 4 years, which includes an incentive outlay of Rs 7,325 crore and administrative charges of Rs 25 crore. The scheme will enhance the development of the electronics ecosystem in the country. India will be well-positioned 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 4 years. The Scheme will provide impetus to Domestic Value Addition for IT Hardware which is expected to rise to 20% to 25% by 2025. “The PLI scheme for IT Hardware i.e. Laptops, tablets, All in One PCs and Servers with an allocation of INR 7300 crore is yet another step by the MEITY to fulfill the vision of making India an Electronic Manufacturing hub for the world and increase India’s manufacturing competitiveness. This scheme also promises a substantial increase in value addition which will further the components ecosystems,” said Kunal Chaudhary, Tax Partner, EY India.
(With inputs from PIB)