India Approves Pli 2.0 For It Hardware With A Budget Of Rs 17,000 Crores

In a significant move aimed at boosting the electronics manufacturing sector in India, the Cabinet has approved the Production Linked Incentive (PLI) 2.0 scheme for IT hardware. The scheme, with a budgetary outlay of Rs 17,000 crores, is expected to cover a wide range of products including laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices.

The tenure of the PLI 2.0 scheme has been set at six years, providing an extended period for manufacturers to capitalise on the incentives. The scheme’s primary objective is to promote domestic manufacturing and enhance India’s position as a global hub for IT hardware production.

According to sources, under the PLI 2.0 scheme, the government envisions an expected incremental production of Rs 3.35 lakh crore, with an estimated incremental investment of Rs 2,430 crore. This initiative is also expected to generate approximately 75,000 direct employment opportunities in the IT hardware sector.

In the last eight years, with a compounded annual growth rate (CAGR) of 17 percent, the sector has crossed the significant milestone of producing $105 billion worth of electronics. Notably, India has emerged as the world’s second-largest manufacturer of mobile phones, with exports crossing the remarkable mark of $11 billion this year.

The PLI 2.0 scheme builds upon the success of the earlier PLI for IT hardware, which was introduced in March 2020. The initial scheme offered incentives ranging from four percent to one percent and covered a period of four years, from FY22 to FY25. Fourteen companies were approved under the previous PLI scheme, with the government anticipating investments of Rs 2,500 crore, exports worth Rs 60,000 crore, and a total production value of Rs 1,60,000 crore. The budget outlay for the first scheme stood at Rs 7,350 crore.

In light of the growing potential in the IT hardware sector, Ashwini Vaishnaw, the Minister for Electronics and Information Technology, announced significant changes to the PLI scheme. The budget outlay has been augmented to Rs 17,000 crore. The revised PLI scheme will now extend for a period of six years, providing a longer-term impetus to manufacturers.

Moreover, the government has increased the maximum benefit provided under the scheme to five percent and introduced an optional incentive for using local components. These measures aim to incentivise manufacturers to establish their production bases in India and promote the adoption of domestic components, potentially driving the growth of the domestic supply chain.

Ashwini Vaishnaw emphasised that the government is committed to achieving its target of $300 billion in electronics manufacturing by FY26. The sector’s current growth rate of 17 percent demonstrates a favourable environment for investors and the immense potential for further expansion.

Under the revised PLI scheme for IT hardware, manufacturers stand to greatly benefit, with maximum incentives reaching up to eight to nine percent for the utilisation of local components.

On the announcement, Prabhu Ram, Head, Industry Intelligence Group, CyberMedia Research said, “Driven by its success in smartphone manufacturing, India now has the potential to build on the opportunities presented by ongoing supply chain realignments. The PLI 2.0 for IT Hardware will be pivotal in strengthening India’s electronics ecosystem.”

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