Govt approves 2nd phase PLI rollout for IT hardware

The budgetary outlay for this phase is INR 17,000 crore - more than double the incentives offered in the initial version of the scheme

May 18, 2023

The scheme is expected to draw an investment of INR 2,430 crore

It is projected to generate an additional incremental production worth INR 3.35 trillion

The government has introduced an optional additional incentive of up to 3% for companies utilizing locally manufactured components

The second phase has been well-received by the industry and experts

The government has approved the second phase of the production-linked incentive (PLI) scheme for IT hardware, with a budgetary outlay of INR 17,000 crore. This amount is more than double the incentives offered in the initial version of the scheme.

According to Union Minister for Electronics and Information Technology Ashwini Vaishnaw, the scheme is expected to draw an investment of INR 2,430 crore. It is projected to generate an additional incremental production worth INR 3.35 trillion and create approximately 75,000 direct employment opportunities.

The newly approved scheme will span six years and provides applicants with the flexibility to choose 2023, 2024, or 2025 as the base year for commencing production. As per Vaishnaw, the scheme entails an incentive of up to 5% on incremental sales, surpassing the roughly 2% offered during the first phase.

The government has specified that the scheme will apply to companies involved in the production of laptops, tablets, all-in-one personal computers, servers, and ultra-small form factor devices.

In addition to the 5% incentive, the government has introduced an optional additional incentive of up to 3% for companies utilizing locally manufactured components. Vaishnaw explained that this incentive would apply to items such as semiconductor chips, processors, and memory chips manufactured in India.

Overall, if a company achieves complete localization, as envisioned in the new scheme, it stands to receive a total incentive ranging from 8% to 9%.

Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, stated that the scheme would create additional incentives for companies to invest and establish their manufacturing bases in India. He also highlighted the scheme’s benefits for original equipment manufacturers (OEMs) that incorporate Indian-designed intellectual property (IP) into their systems and products.

The decision to increase the average incentive from 2% in the first phase to 5% and the corpus from INR 7,350 crore to INR 17,000 crore in the second phase has been well-received by the industry and experts. They believe it will lead to comprehensive growth in the Indian electronics manufacturing industry.

They further mentioned that this stimulus would boost the production of high-quality products at competitive prices, making Indian IT products more appealing to global markets and resulting in a significant increase in export revenue.

Source: Economic Times

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