This scheme promises a substantial increase in value addition

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." 

As a part of the PLI scheme for mobile and electronic equipment manufacturing, an incentive of 4-6 per cent is planned for electronics companies which manufacture mobile phones and other electronic components such as transistors, diodes, thyristors, resistors, capacitors and nano-electronic components such as micro electromechanical systems. Similarly, the PLI scheme for pharmaceutical ingredients and medical devices seeks that applicants will commit a certain amount prescribed by the government as investment to build capacities in these areas.

According to experts, the idea of PLI is important as the government cannot continue making investments in the capital-intensive sectors as they need longer times for start giving the returns. Whereas, to invite global companies with adequate capital to set up capacities in India is a good initiative. The government will pay the companies it selects for the scheme a specific proportion of their turnover from making and selling the bulk drugs or medical devices as an incentive over the next few years. The amount of the incentive would decrease as the years go by.

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