Cabinet approves Production Linked Incentive Scheme for IT Hardware

Cabinet approves Production Linked Incentive Scheme for IT Hardware

New Delhi, February 24, 2021

The Union Cabinet today approved the Production Linked Incentive (PLI) Scheme for IT Hardware.

The scheme proposes a production linked incentive to boost domestic manufacturing and attract large investments in the value chain of IT Hardware.

The target segments under the proposed Scheme include Laptops, Tablets, All-in-One PCs and Servers, an official press release said.

The scheme will extend an incentive of 4% to 2% / 1% on net incremental sales (over the base year 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for four years.

The scheme is likely to benefit five major global players and 10 domestic champions in the field of IT Hardware manufacturing including Laptops, Tablets, All-in-One PCs, and Servers. This is an important segment to promote manufacturing under AtmaNirbhar Bharat as there is huge import reliance for these items at present, the release said.

The total cost of the proposed scheme is about Rs 7,350 crore over four years, which includes an incentive outlay of Rs 7,325 crore and administrative charges of Rs 25 crore.

The release said the scheme would enhance the development of the electronics ecosystem in the country. India will be well-positioned as a global hub for Electronics System Design and Manufacturing (ESDM) on account of integration with global value chains, thereby becoming a destination for IT Hardware exports.

The scheme has an employment generation potential of over 1,80,000 (direct and indirect) over four years, it said.

The scheme will provide impetus to Domestic Value Addition for IT Hardware which is expected to rise to 20% - 25% by 2025.

The vision of National Policy on Electronics 2019 notified on February 25, 2019, is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.

Currently, the laptop and tablet demand in India is largely met through imports valued at $ 4.21 billion and $ 0.41 billion, respectively in 2019-20. The market for IT Hardware is dominated by 6-7 companies globally which account for about 70% of the world's market share. These companies can exploit large economies of scale to compete in global markets. These companies must expand their operations in India and make it a major destination for the manufacturing of IT Hardware.

"Given the current global scenario, the world of manufacturing is undergoing a paradigm shift. Manufacturing companies across the globe are looking to diversify their manufacturing locations to mitigate the risk involved in depending on a single market," the release added.


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