India hikes incentive scheme for IT product manufacturing

India on Wednesday unveiled an expanded incentive scheme to attract major investment in IT hardware manufacturing, doubling the amount to $2 billion as it aims to spur domestic production of laptops and tablets.
Apple Mac salesThe program, which also covers personal computers and servers, is expected to benefit global and Indian companies such as Dell, Wistron, Dixon, and Foxconn.

The scheme is key to India’s ambitions to be global hub in electronics manufacturing, with the country targeting an output worth $300 billion by 2026.

The revised plan will be for a period of more than six years, with India offering cash-backs for manufacturers on sales of locally made goods that exceed an annual target. The original incentive plan was announced in February 2021.

The investments via the plan are expected to create more than 75,000 jobs, the government said.

With an anticipated incremental investment of Rs 2,430 crore, the scheme aims to generate an incremental production amounting to Rs 3,35,000 crore.

Moreover, the PLI 2.0 is expected to create 75,000 direct jobs along with over 2,00,000 indirect jobs, significantly increasing employment opportunities in the sector.

“This well-drafted scheme embodies Prime Minister Narendra Modi’s commitment to establishing India as a global electronics manufacturing hub. It will ensure investments across the IT hardware value chain, demonstrating the government’s receptiveness to industry inputs and their determination to translate words into action,” said Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA).

The IT hardware industry is targeted to reach a production of $24 billion by 2025-26, with exports anticipated to be in the range of $12-17 billion during the same period.

An HP spokesperson told IANS that the company has a long history of manufacturing in India and is committed to its business in the country.

“We are currently evaluating details of the program along with its potential benefits to HP and its customers,” said the company spokesperson.

Rajen Vagadia, VP, Qualcomm India and President, Qualcomm India and SAARC, told IANS that the PLI Scheme 2.0 will accelerate the domestic IT Hardware manufacturing ecosystem in India and enable businesses to grow beyond regional markets.

“Following the PLI Scheme’s success in establishing a robust, globally recognized foundation for smartphone manufacture, PLI 2.0 will strengthen India’s electronic and IT hardware industry further and its presence in the global value chain,” said Vagadia.

Domestic mobile phone manufacturing has set a strong precedent of large-scale manufacturing and exports.

The mobile phone export sector has achieved 100 percent export growth, crossing Rs 90,000 crore in exports for the first time ever in FY 2022-23.

A Gururaj, MD, Optiemus Electronics, said they are manufacturing IT Hardware for many reputed brands under the current PLI and now with the PLI 2.0, “we are actively considering and evaluating our options to participate in this new phase of growth in electronics manufacturing”.

The Production Linked Incentive (PLI) scheme in India is a powerful catalyst that fuels industrial growth and encourages innovation. By providing targeted incentives to key sectors, it creates a favorable environment for businesses to thrive, leading to job creation and technological advancement.

“The recent budgetary allocation of INR 17,000 crores for IT Hardware serves as a compelling incentive for IT companies, stimulating increased production of high-quality products at competitive prices, making Indian IT products more appealing to global markets and leading to a significant boost in export revenue. This will further promote domestic production through establishment of manufacturing units and ancillary industries which in turn will also lead to increased employment opportunities,” Peeyush Vaish, Partner and TMT Industry Leader, Deloitte South Asia.