MeiTY proposes launch of PLI for IT hardware and wearables

If implemented the scheme will boost exports by 50%, enhance domestic manufacturing and strengthen the supply chain

December 25, 2021

The Government’s vision is to increase the sector’s value addition to 25% and production capacity to US$ 92 billion (Rs 6.5 lakh crore) in 2022.

Increasing the production of electronic chips is key to boosting growth within the sector.

Imports of consumer electronic goods and electronic components have fallen to US$ 38 billion (Rs 2.85 lakh crore) in 2020-21.

IT hardware imports grew from US$ 10 billion (Rs 68,400 crore) in 2019-20 to US$ 10.55 billion (Rs 79,000 crore) in 2020-21.

The Ministry of Electronics and Information Technology (MeitY) has proposed the launch of a Production Linked Incentive (PLI) worth US$ 2.938 billion (Rs 22,000 crore) towards the development of IT hardware and wearable technologies in 2022. The proposal is aimed at boosting exports by 50% and expanding the growth of the sector at large. The sector is currently covered under the US$ 30 billion (Rs 2.3 lakh crore) policy to boost domestic manufacturing and fill gaps in the supply chain. 

A statement made by a senior MeitY official to the Press Trust of India (PTI) reveals the Government’s vision to increase the sector’s production capacity to US$ 92 billion (Rs 6.9 lakh crore) and increase value addition from 18% to 25% in 2022. The move will encourage more Indian companies to participate in the PLI and cater to the demand of the Indian market, eventually helping them expand into the global market. The industry currently faces a shortage of electronic chips and is vulnerable to the shocks posed by the pandemic. In order to bridge the gap, the government has introduced six-year incentives to the effect of US$ 10.1 billion (Rs 76,000 crore) , targeting close to 100 companies. 

The 2020-21 period has seen an increase in the domestic manufacture of electronic components and consumer electronic goods, shrinking imports to US$ 38 billion (Rs 2.85 lakh crore). Imports in IT hardware, on the other hand, are seen to have increased from US$ 10 billion (Rs 68,400 crore) in 2019-20 to US$ 10.55 billion (Rs 79,000 crore) in 2020-21. Industry experts maintain that the schemes introduced by the government will enable greater growth within the Electronics Manufacturing sector and gradually bridge the demand-supply gap in semiconductor manufacturing.