Cabinet approves PLI scheme for manufacturing laptops, tablets, PCs, servers locally

The Union Cabinet has approved the production-linked Incentive scheme for IT Hardware. The scheme proposes an incentive to boost domestic manufacturing and attract large investments in the value chain of IT Hardware. The target segment under the proposed scheme includes laptops, tablets, all-in-one PCs, and servers said Union Minister Ravi Shankar Prasad.

This comes after the grand success of Production Linked Incentive (PLI) scheme in bringing investments in mobile phone (handsets and components) manufacturing, the Union Cabinet on Wednesday approved the 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 production linked incentive to boost domestic manufacturing and attract large investments in the value chain of these IT Hardware products.

The total cost of the PLI scheme for IT hardware is approximately Rs 7,350 crore over 4 years. The scheme intends to provide incentives between 4-1 per cent 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 years.

As per the Cabinet statement, the scheme is expected to lead production worth Rs 3.26 lakh crore and exports worth Rs 2.45 lakh crore in four years. It is expected to bring additional investments of Rs 2,700 crore, earn direct and indirect revenue around Rs 15,760 crore and create 1.80 lakh jobs in four years.

The Cabinet statement says, the PLI scheme for mobile phones and specified electronic components was launched last year during the middle of pandemic to establish India as a hub of electronic manufacturing. "It has been a huge success in terms of interest received from global as well as domestic mobile manufacturing companies. 16 companies were approved under the first round of the PLI scheme for large scale manufacturing of mobile phones and specified electronic components,"

The scheme was announced in April 2020; last date for application was July 31, 2020 and the scheme commenced on August 1, 2020. All this happened during the most challenging times of COVID-19, when the economy and manufacturing was under severe stress.

Prasad further said that the Production-Linked Incentive Scheme for mobile phones and components which was announced in April during the height of Covid-19 delivered production worth Rs 35,000 crore, created 22,500 jobs, and brought around Rs 1,300 investment.

Another scheme for promoting manufacturing of electronics components called SPECS has also received 22 applications. Good atmosphere created by the Union Budget was being questioned as to how these Budget announcements will be achieved. Success of PLI shows how these announcements have been implemented, it added.

"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," the Cabinet said.

PLI Scheme is conceived in a manner that incentives are payable by government only after investment has been done, employment has been generated, production and sales targets have been met.

Kunal Chaudhary, Tax Partner, EY India, "The PLI scheme for IT Hardware i.e. Laptops, tablets, All in One PC's and Server with an allocation of INR 7300 crore is yet another step by the MEITY to fulfil 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"