The scheme has included PCB assembly, assembly of battery packs, assembly of power adapters and assembly of cabinets under its aegis
Multinational companies including Dell, Wistron, Rising Stars Hi Tech (a Foxconn subsidiary) and Flextronics have shown interest in manufacturing IT Hardware products in India. Domestic companies including Lava, Micromax, Dixon Technologies, Infopower, Syrma Technologies, Neolync Electronics, Optiemus Infracom, Netweb Technologies, Smile Electronics, Panache Digilife and RDP Workstations have also shown interest in manufacturing IT hardware components such as laptops, tablets, all-in-one personal computers (AIOs) and servers.
The government of India had announced the PLI for IT Hardware during March 2021. The newly announced PLI scheme for IT hardware promises incentives on an incremental basis, and an outlay of Rs 7,350 crore divided over four years, have been allocated for the same.
“The PLI for IT Hardware, along with many other PLIs, is the first scheme that are promising incentives based on how much you produce. This is where the Opex and Capex parts get differentiated. There is also a cap on this PLI scheme, but that is a good thing as the government has ensured that things do not get out of the hand,” Nitin Kunkolienker, President, MAIT had said in a inteaction with EFY recently.
It is expected that the scheme will help India’s domestic value addition to grow from 5-12 per cent to 16-35 per cent over the next four years. The market of laptops, servers, tablets and many other products falling under the IT hardware category is led by brands originating out of India. The top five brands including Dell, HP, Lenovo, Acer and Asus accounted for over 85 per cent share of the total PC computers sold in India during the 2020-21 period (IDC).
“Rs 30,000 crore worth of laptops and Rs 3,000 crore worth of tablets are currently sold in India. Of this, more than 80 per cent is imported. As a result of the latest PLI, the government hopes to draw into India the top 5 global companies which control 50 per cent of the international market. A total Rs 3,26,00 crore worth of production will be achieved, of which 75 per cent will be made up by exports,” Telecom Minister Ravi Shankar Prasad had said while launching the scheme.
Notably, the PLI for IT Hardware is offering an incentive of four per cent to two / one per cent on net incremental sales (over base year) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four years. The target segment under PLI includes laptops, tablets, all-in-one PCs and servers. According to IDC, the market size for laptops in India was approximately 75 lakh (7.5 million) units in 2019-20 valued at Rs 33,950 crore (USD 4.85 billion).
The scheme has included PCB assembly, assembly of battery packs, assembly of power adapters and assembly of cabinets under its aegis. For the PCB assembly part, the applicant if finalized, will need to assemble these himself locally in India. The rest of the segments can be assembled locally by the company itself, or by one of its vendors. An incremental incentive of 3 per cent will be on offer starting April 1, 2022 on local assembly of PCBs.
Similarly, starting first April 2023, this incentive would be two per cent on local assembly of PCBs and battery packs, and from first April 2024, the incremental incentive offered would either be two per cent local assembly of PCBs, battery packs, SMPS and cabinets, or one per cent on local assembly of PCBs, battery packs and SMPS.
Rs 720 crore has been earmarked as the total incentive for the first year, Rs 1.305 crore for the second year, Rs 1.820 for the third year and Rs 3.480 for the fourth year. The total amount of incentives for the fourth years is Rs 7,325 crore.
