Govt may revise PLI outlay for IT hardware to 20,000 crore

With the restructured scheme, the government is hoping to attract major electronics manufacturing companies like Apple and HP, and also boost exports in the sector.

The updated scheme will also increase incentive rates to nearly two times, and to allow for increased flexibility, applicants will be able to decide their own start and end dates between a period of five to seven years, a senior government official said.

One of the key changes expected in the scheme is that it will increase the overall average incentive rate to more than 5 per cent for domestic and global companies, up from the current rate of 2.21 per cent for both categories. Companies that locally manufacture certain components could also get additional incentives under the restructured scheme. For instance, companies that manufacture batteries and printed circuit board assemblies locally would receive an additional incentive of 1.25 per cent, and if they also manufacture power modules domestically, the incentive rate could increase by 2.25 per cent.

Earlier this year, Minister of State for Electronics and IT Rajeev Chandrasekhar had said that the new PLI scheme for IT hardware will be launched soon, and also offer additional incentives for manufacturers that incorporate Indian-designed intellectual property into their products.

The government had also approved the participation of more than a dozen companies, including Dell, Flextronics, a unit of Foxconn, and Dixon, among others, under the previous scheme. However, the electronics manufacturing industry had raised concerns that the incentives under the scheme were not enough to make a business case for investing in facilities in India.

Data on the progress made in the earlier scheme reviewed by this paper showed that so far, a little more than Rs 120 crore was invested by the companies selected under the scheme, far short of the projected investments of Rs 2,500 crore.

The Manufacturers’ Association For Information Technology (MAIT), the industry body that represents companies like Apple, Dell, HP and Lenovo, had earlier called for increasing incentives offered under the scheme. In fact, the body had said that the scheme’s outlay had to be Rs 20,000 crore. “I don’t think that, for PCs , if you relocate and reposition supply from China or other parts of the world, it will be possible with just these kinds of funds. They are very insignificant… At least Rs 20,000 crore is required (under PLI). It is based on value addition potential that exists in the country,” MAIT President Nitin Kunkolienker had told news agency PTI in 2021.