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This is an archive article published on August 31, 2023
38 IT firms apply to make laptops, PCs under PLI scheme
The development comes weeks after the Centre imposed — and then postponed — a licensing requirement on the import of laptops and personal computers, which had set alarm bells ringing at major electronics hardware manufacturers. The move was deferred until October 31.
While the expected incremental production at the end of six years of the scheme is estimated at Rs 3.35 lakh crore, it could bring an incremental investment of just Rs 4,000 crore over these many years.
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38 IT firms apply to make laptops, PCs under PLI scheme
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Asus, Dell, HP and Foxconn are among 38 companies that have submitted applications to manufacture laptops, personal computers and servers in India under the Centre’s production-linked incentive (PLI) scheme for IT hardware. Apple, however, has opted to skip participation in the scheme.
The development comes weeks after the Centre imposed — and then postponed — a licensing requirement on the import of laptops and personal computers, which had set alarm bells ringing at major electronics hardware manufacturers. The move was deferred until October 31.
While the expected incremental production at the end of six years of the scheme is estimated at Rs 3.35 lakh crore, it could bring an incremental investment of just Rs 4,000 crore over these many years. The government estimates the manufacturing process to result in 75,000 direct jobs, said Union Minister for Electronics and IT Ashwini Vaishnaw.
Other companies that have applied for the scheme include Lenovo, Acer, and Flex, which is said to be manufacturing Reliance’s JioBook laptop. HP Enterprises (HPE) has also applied for manufacturing servers in India.
A day after the import restriction was imposed, two senior officials from the IT Ministry had said as of August 4, only two companies had applied to participate in the IT hardware PLI which was renewed in May this year, with 44 companies having registered with an intent to apply. The number of applicants jumped by another 36 after 26 days, taking the total to 38. The deadline for application was August 30.
The Centre has more than doubled the IT Hardware PLI in May this year to Rs 17,000 crore since it was first cleared in 2021 with an outlay of Rs 7,350 crore. The first version of the scheme was a laggard with only two companies – Dell and Bhagwati – managing to meet first year (FY22) targets, and the industry calling for a renewed scheme with an increased budgetary outlay.
The average incentive over six years will be about 5 per cent of net incremental sales compared with the 2 per cent over four years offered earlier. Companies that locally manufacture certain components including memory modules, solid state drives and display panels will also get additional incentives under the restructured scheme. There will be flexibility in choosing the base year as well. Officials said the total benefits — given the sales projections by companies — could add up to PLI of Rs 22,880 crore.
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Dell, which was the only big brand to participate in the earlier iteration of the scheme, is understood to migrate to the new scheme. However, the government needs to pay the company close to Rs 50 crore for its production under the first scheme, which is said to be under approval currently.
In response to a question by The Indian Express on whether the import restriction acted as a fillip for the applications towards the PLI scheme, Vaishnaw said, “I asked them (the applicants) the concern, people don’t have any concerns.”
The Indian Express had earlier reported about the chaos that ensued at some of the biggest tech companies following the import restriction notification by the Director General of Foreign Trade (DGFT), with companies like Apple and Samsung freezing their imports until more clarity was available. Some manufacturers also had their consignments held at customs due to the immediate nature of the directive.
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AS MANY as 38 companies have applied under PLI scheme, but the incremental investment over six years is estimated to be a modest Rs 4,000 crore (over Rs 650 crore a year on an average). While it is not known how much incentive each company will get, the government had in May more than doubled the PLI outlay for IT hardware to Rs 17,000 crore.
Earlier this month, industry associations representing companies like Apple, Dell and HP, had written to the US government decrying New Delhi’s decision, and seeking its intervention to initiate a conversation with the Indian government and urge New Delhi to reconsider the policy.
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India has seen an increase in imports of electronic goods and laptops/computers in the last few years. During April-June this year, the import of electronic goods increased to $6.96 billion from $4.73 billion in the year-ago period, with a share of 4-7 per cent in overall imports.
Of the seven categories restricted for imports by India, the majority share of imports is from China. During April-May, the latest period for which country-wise data is available, India’s imports from China for these seven categories of restricted imports were valued at $743.56 million, down 5.6 per cent from $787.84 million.
The highest share of imports is in the category of personal computers including laptops, and palmtops, under which imports from China stood at $558.36 million in April-May this year as against $618.26 million in the year-ago period. China accounts for roughly 70-80 per cent of the share of India’s imports of personal computers, laptops.
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