IT hardware industry to be as globally successful as TCS, HCL, and Infosys. Govt announces PLI scheme worth ₹7,250 crores for IT Hardware
After the success of the Production Linked Incentive Scheme in bringing investments in mobile phone (handsets and components) manufacturing, the Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved the Production Linked Incentive (PLI) Scheme for IT hardware products.
The target IT hardware segments under the proposed Scheme include Laptops, Tablets, All-in-One Personal Computers (PCs), and Servers. The scheme proposes a production-linked incentive to boost domestic manufacturing and attract large investments in the value chain of these IT Hardware products.
Union Minister Ravi Shankar Prasad said, “the government’s aim is to make Indian IT hardware as successful as Indian IT services, which includes companies like Tata Consultancy Services (TCS), HCL Technologies, Infosys, Wipro, and Tech Mahindra — on a global scale”
The Scheme shall extend incentives between 4% to 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.
The proposed scheme is likely to benefit major global as well as domestic manufacturers of IT hardware products namely Laptops, Tablets, All-in-One PCs, and Servers. This is an important segment to promote manufacturing as there is huge import reliance for these items at present.
PLI Scheme is conceived in a manner that incentives are payable by the government only after investment has been done, employment has been generated, production and sales targets have been met.
The scheme will enhance the development of 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.
- Over the next 4 years, the Scheme is expected to lead to total production of upto INR 3,26,000 crore (INR 3.26 lakh crore) by these 5 Global Champions and 10 National Champions.
- It is equally heartening to note that the scheme is also expected to boost exports significantly. Out of the total production in the next 4 years, more than 75% are expected to be exports of the order of INR 2,45,000 crore.
- The Scheme will bring an additional investment in electronics manufacturing to the tune of INR 2,700 crore.
- The direct and indirect revenues generated from production under this scheme are expected to be INR 15,760 crore over next 4 years.
- Domestic value addition for IT Hardware is expected to rise to 20% – 25% by 2025 from the current 5% – 10% due to the impetus provided by the Scheme. Increase in both domestic manufacturing and domestic value addition will help significantly reduce the large foreign exchange outgo that India will have to otherwise bear.
- It is expected that the scheme would lead to large scale electronics manufacturing in the country and open tremendous employment opportunities. The scheme has a potential to generate over 1,80,000 jobs (direct and indirect) over 4 years.
- The scheme will promote large scale electronics manufacturing of IT Hardware products and contribute significantly to achieving a USD 1 Trillion digital economy and a USD 5 Trillion GDP by 2025.