The PLI scheme 2.0 for IT hardware to make India manufacturing bases

The Production Linked Incentive (PLI) scheme 2.0 has the potential to make India a China+ IT hardware manufacturing hub. The scheme offers incentives to companies that set up manufacturing plants in India for a range of IT hardware products, including semiconductors, display panels, and mobile phones.

In yet another significant stride for the Modi government’s efforts towards ‘Atmanirbhar Bharat,’ as many as 38 hardware manufacturers have applied for licenses under the renewed Production-linked incentives schemes (PLI 2.0) to set up manufacturing bases in the country.

With this positive momentum, very soon India will not only be able to emerge as a global hardware manufacturing hub but give tough competition to China as the preferred global destination of IT hardware manufacturing. The government’s move to impose restrictions on the import of laptops, tablets and PCs would prove to be a shot in the arm for local manufacturing and it is going to impact the channel business and the wider IT industry.

The policy changes also ordained upon companies planning to bring laptops and computers for sale in India to seek government license for their inbound shipments. Ashwini Vaishnaw, IT Minister, Government of India, said, “Overwhelming response received for the production of laptops and PCs under the hardware Production Linked Incentive Scheme (PLI) scheme. Companies that will be manufacturing laptops include HP India, Dell, Acer, Lenovo, Thomson and others. Servers will be made by HP Enterprises.”

In line with the past forecasts and barely after three months since the PLI 2.0 came into force, the initial results on the ground are there for all to see. The unique scheme, whose application window will close on coming Wednesday, received robust response from the hardware manufacturers. The revised production-linked incentive (PLI) scheme for IT hardware has so far attracted positive response from 38 companies, including leading hardware giants HP, Dell, Lenovo, and Foxconn, as well as local manufacturer Dixon Technologies. The companies together add up to investments to the tune of over ₹4,000 crore to produce goods worth ₹3.35 lakh crore over the next six years.

The government’s import restrictions on laptops, PCs and tablets were long felt to build up domestic hardware manufacturing in the country. While companies have been looking at India as a great market, they have always kept China as the chosen destination for hardware manufacturing. Currently, the IT industry is contributing nearly 10% to the GDP, which has grown 7.8% this quarter. At this backdrop to pump fresh life into domestic manufacturing, the move was badly needed.

“We are likely to see expected incremental production of Rs 3.35 lakh crore. The expected direct employment is going to be 75,000. Production of PCs, laptops, servers will increase in months to come. India is emerging as a trusted supply chain partner and value-added partner,” said Vaishnaw.