By Rupin Chopra and Apalka Bareja
India is becoming a major electronics manufacturing nation as the global ecosystem of electronics manufacturing moves in India. Electronics manufacturing in India has witnessed consistent growth with 17% Compound Annual Growth Rate (“CAGR”) in last 8 years. This year it crossed a major benchmark in production – 105 billion USD (about Rs 9 lakh crore).
On May 17, 2023, the Union Cabinet, chaired by the Hon’ble Prime Minister Shri Narendra Modi approved the second phase of the Production Linked Incentive (“PLI”) Scheme 2.0 for IT Hardware with a budgetary outlay Rs. 17,000 crore, more than doubling the incentives in the initial version of PLI scheme for IT hardware which aimed at attracting global companies to manufacture in India.
Production Linked Incentive or PLI scheme
Production Linked Incentive or PLI scheme is a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units. The main aim of this scheme is to invite foreign investors to set up their manufacturing units in India and also promote the local manufacturers to expand their units and generate employment and cut down the country’s reliance on imports from other countries. It was introduced as a part of the National Policy on Electronics by the IT Ministry to give incentives of 4-6% to electronic companies, manufacturing electronic components like mobile phones, transistors, diodes, etc.
In February 2021, the government had approved the PLI scheme for IT hardware, covering the production of laptops, tablets, All-in-One PCs, servers and ultra-small form factor devices with an outlay of Rs. 7,350 crore.
Tenure of the Production Linked Incentive Scheme 2.0
The tenure of this scheme will be applicable for 6 years. The government expects incremental production of Rs. 3.35 lakh crore, incremental investments worth Rs. 2,430 crore with incremental employment of 75,000 in this scheme.
Source: Press Release available at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1924766