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INDIA: PLI SCHEME FOR IT HARDWARE

March 1, 2021

By Lucy Rana and Rupin Chopra

The Government of India on February 24, 2021 announced approval of Rs 7,325 Crore under the PLI (Production Linked Incentive) Schemes for IT hardware such as laptops, tablets, all-in-one-personal computers, and servers.

Under the PLI Scheme, the Government has aimed to bring on board the five laptop and tablet manufacturing companies across the world to expand the existing units or setup new units.

The Current Demand of Laptop and Tablets are met in India through:

Imports valued-

  1. INR 29,470 Crores (USD 4.21Million)
  2. INR 2,870 Crores (USD 0.41 Billion)

The initiative of the Government has intended to reduce the dependence on the import of Laptop and IT Hardware.

Undeniably, in the past two decades, the demand for laptop and IT related hardware has increased substantially. The reports suggested that market for IT Hardware is dominated by 6-7 companies of the world and these companies to account for 70% of the world market share[1].

Statistics of PLI Scheme for Period of 4 Years (2021-2025)

The scheme has proposed the large scale electronics manufacturing of IT Hardware products, significantly increases USD 1 Trillion Digital Economy and USD 5 Trillion GDP by 2025. It includes further proposed benefits such as:

 

S. No. PLI Proposed Benefits Benefits to be obtained
1. Net Incremental Sales 4% to 1% of goods manufactured in India
2. Production Rise of INR 3.26 Lakhs Crores of the Gross Manufacturing Giants
3. Exports 75% rise in the exports from the order of INR 245,000 Crores
4. Revenue Rise Rise of INR 15,760 Crore
5. Domestic Value Addition Present-From 5%-10% to

Expected- 20%-25%

6. Increase in Job 1.8 Lakh jobs to increase directly and indirectly

 

This scheme will help in boosting the ranking of the country as a global hub of Electronic System and Manufacturing and will also bring the integration with the Global Value Chain.

Implications of PLI Scheme for Laptop Manufacturers

Companies all over the world are working towards expansion of their operations and manufacturing in different parts of the world. The benefits the Manufacturers under MSME associated will render as follows:

S. No. Benefits
1. Capital Linked Incentive Scheme– it subsidizes some percentage of investment.
2. Expenditure Linked Incentives-
a. Tariff Subsidies-a trade subsidy to domestic manufacturer reduces the domestic cost of manufacture.
b. Stamp Duty Reimbursement– a tax to the government for the sale or purchase on the specified instruments.
3. State Linked Incentives
a.

 

SGST Reimbursement– it is the Goods Service tax benefit given to the manufacturer.
b. Turnover Based Subsidy– a benefit over the net investment value.
4. Mega Units customized Incentives from States– a customized schemes by the respective states.
5. Duty Scrips from Foreign Trade Transactions-a duty credit scrip issued by the DGFT and used to pay for the taxes to CG.
6. Reduced Corporate Tax Rates

 

  1. To position India as a global hub for Electronic System Design and Manufacturing (EDSM) as a vision of National Policy on Electronics 2019, notified on 25th Feb 2019.
  2. To increase capabilities in the country for developing core components such as chipsets.
  3. To make the MSME reach the Global standards.

Conclusion

These reports and statistics suggest that if such companies expands their operation in India, it will make India a major destination for manufacturing IT Hardware

The Production Linked Incentive scheme (PLI) aims to give incentives on incremental sales from the products manufactured in domestic units. The aim of the scheme is to promote and encourage the existing manufacturing units and expand employment opportunities in India. The Scheme has been floated is in consonance with Atmanirbhar Bharat Mission – a scheme for self-reliance.

As stated by the IT Ministry, PLI in simple terms aims at inviting the investors that come to India, invest, set up factory, manufacture, and export and earn incentives.

[1] https://pib.gov.in/PressReleasePage.aspx?PRID=1700432

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