IT Hardware: 23 Firms Poised for PLI Scheme 2.0, 4 to Commence Production Within 90 Days

20 Nov, 2023

IT Hardware: 23 Firms Poised for PLI Scheme 2.0, 4 to Commence Production Within 90 Days

A significant leap in India's manufacturing landscape emerges as 27 companies, among them Acer, Asus, Dell, HP, and Lenovo, rally behind the 'Make in India' initiative via the Production Linked Incentive (PLI) scheme. This program, spearheaded by the Modi government, fuels the local production of laptops, PCs, tablets, and servers, as outlined by Union Minister for Electronics & Information Technology Ashwini Vaishnaw.

Vaishnaw highlights that among the approved applicants, 23 companies stand ready to commence manufacturing from day one, with four more companies gearing up to initiate production within the next 90 days. Notably absent from this initiative is the U.S.-based smartphone giant, Apple, opting out of the Centre's incentive plan.

The PLI scheme casts a wide net, encompassing laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices, projecting a substantial job creation of around two lakh opportunities, with an estimated 50,000 direct job placements throughout the scheme's tenure.

Anticipated investments from participating companies are estimated at ₹3,000 crore, contributing to the value of IT hardware reaching ₹3,50,000. Minister Vaishnaw expresses contentment, noting the industry's alignment with Prime Minister Modi's vision for the country's progress.

Earlier indications by Vaishnaw in August suggested 38 companies had applied for manufacturing laptops, PCs, and servers under the PLI 2.0 Scheme for IT hardware. The minister foresees this scheme mirroring the success story of mobile phone manufacturing, which witnessed exponential growth post-PLI implementation, propelling India into a prominent position as both a manufacturer and exporter of mobile phones. Similarly, the scheme is expected to position India as a leading manufacturer and exporter of PCs, laptops, and servers.

Applications for the PLI scheme closed on August 30, 2023, with expected substantial value addition ranging between 30% and 48%. Once semiconductor manufacturing commences, this value addition is projected to surge to 75%.

The incentives per company are contingent on net incremental sales of manufactured goods within the specified segment over the base year, capped at ₹4,500 crore for global companies, ₹2,250 crore for hybrid (global/domestic) companies, and ₹500 crore for domestic companies.

Envisioned to be a pivotal contributor to India's electronics manufacturing turnover target of approximately $300 billion by 2025-26, the PLI scheme follows India's ascent to the world's second-largest mobile phone manufacturer. This milestone was accompanied by mobile phone exports crossing the $11 billion mark (₹90,000 crore) this year.

India Ratings and Research (Ind-Ra) data indicates a substantial surge in FDI in computer hardware and software, rising to $72.7 billion from April 2014 to March 2022, compared to a mere $12.8 billion from April 2000 to March 2014. Domestic electronic goods production also witnessed significant growth, escalating from ₹3,17,331 crore in 2016-17 to ₹6,40,810 crore in 2021-22, reflecting a robust compound annual growth rate (CAGR) of 15%.