Cabinet approves ₹17,000 cr PLI scheme for IT hardware

Prime Minister Narendra Modi-led Union Cabinet on Wednesday approved the second production-linked incentive (PLI ) scheme for IT Hardware with a budgetary outlay of ₹17,000 crore.

The PLI Scheme 2.0 for IT hardware covers laptops, tablets, all-in-one PCs, servers and ultra-small form factor devices.

The new scheme, which builds on the success of the PLI scheme for mobile phones, is expected to create 75,000 direct jobs over a period of six years, according to the government.

It is also expected to lead to incremental production of ₹3.35 lakh crore and incremental investment is ₹2,430 crore.

The announcement comes at a time when India has become the world's second-largest manufacturer of mobile phones. Exports of mobile phones crossed a major milestone of $11 billion this year (₹90,000 crore).

Electronics manufacturing in India has witnessed consistent growth with a 17% compound annual growth rate (CAGR) in the last eight years, says the Ministry of Electronics and IT (MeitY). This year it crossed a major benchmark in production of $105 billion (about ₹9 lakh crore), it says.

"The global electronics manufacturing ecosystem is coming to India, and India is emerging as a major electronics manufacturing country," the ministry says.

"India is emerging as a trusted supply chain partner for all global majors. Large IT hardware companies have shown keen interest in establishing manufacturing facilities in India. This is further supported by strong IT services industry having good demand within the country," the government says, adding that most companies would like to supply domestic markets within India from a facility situated in India as well as make India an export hub.

India's smartphone export growth is primarily driven by Apple and Samsung, helping achieve a record-breaking export value of almost US$4 billion in Q1, according to market research firm Canalys.

Last week, Apple supplier Foxconn's India unit acquired a 300-acre land parcel on the outskirts of Bengaluru to ramp up the production of iPhones. The Karnataka government had earlier approved ₹8,000 crore proposal by the Taiwanese electronics giant to set up a mobile phone manufacturing unit near Bengaluru. Foxconn currently manufactures iPhones at its factory in Sriperumbudur in Tamil Nadu. It also plans to invest $500 million in Telangana and create 25,000 jobs.

The other two Taiwanese companies Wistron and Pegatron also assemble Apple iPhones in India.

The government launched its flagship programme 'Make in India' to facilitate investments across sectors in 2014. Attracting higher FDIs in manufacturing was dovetailed with this effort which was supplemented by rolling out of the PLI scheme across 14 key manufacturing sectors in FY21.

According to India Ratings and Research (Ind-Ra), FDI in computer hardware and software increased to $72.7 billion during April 2014 to March 2022 from just $12.8 billion during April 2000 to March 2014.