In a bid to provide a boost to IT hardware manufacturing in India, the Union Cabinet approved the Production Linked Incentive (PLI) Scheme for IT Hardware on 24 February this year. The underlying vision is clear: To make India a global hub for manufacturing and attract large investments in the value chain. The scheme offers an incentive of 4% to 2% / 1% on large-scale production of Laptops, Tablets, All-in-One PCs and Servers for a period of four years. Today, India’s demand for these products is largely met through imports. Given this and growing strategic security concerns, it has become necessary to develop a trusted and reliable value chain for the market.
Making India Global Hub for Manufacturing
India is a large and growing market for IT hardware products. India is expected to consume over $120 bn of IT hardware over the next decade. We have a great opportunity to leverage this impending demand and build economies of scale along with global competitiveness. To enable this, a cascading structure of incentives has been created to effectively incentivise every level of the value chain. The PLI will attract global majors to shift significant manufacturing capacities to India and encourage MSMEs to leverage opportunities offered by a vibrant and robust ecosystem. The scheme also includes a push to develop competence and 'Atmanirbharta' (self-reliance) in critical sub-assemblies like PCBA, Battery Packs, Power Adapters, Chassis etc. This will nurture the ecosystem and enhance cost competitiveness. Besides the PLI, incentives are also being provided on capex for the manufacturing of components and sub-assemblies and for creation of electronics manufacturing clusters. These schemes will create positive spill over effects for multiple allied sectors in addition to ensuring employment generation.
New Digital Realities
Launched in 2015, the Digital India campaign aims to deliver better services and create infrastructure for transparent and inclusive governance. Critical to this is our mission of bridging the digital divide across India. The COVID-19 pandemic has only further awakened us to this reality. According to the 59th Review Report of the National Digital Literacy Mission (NDLM), around 16 crore rural households in India do not have access to computers. This is something PLI for IT Hardware will aim to address by creating a vibrant industrial ecosystem to cater to the ever-growing domestic demand.
In addition, the push for data localization and data governance demands that India develops a secure and reliable hardware supply chain. The PLI scheme is a step in this direction.
All in all, the scheme aims to realise the vision of transforming India into a digitally empowered society, with indigenously built digital infrastructure.
This blog has been co-authored by Lakshya Sharma and Shivangi Sinha.
