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India’s Ambitious PLI Scheme 2.0 for IT Hardware: A Catalyst for Growth

India’s ambitious Production Linked Incentive (PLI) Scheme 2.0 for IT Hardware, recently approved by the cabinet, is promising a significant boost to the country’s electronics manufacturing sector. The scheme, with its generous budgetary outlay of Rs 17,000 crore, aims to stimulate domestic production, attract substantial investments, and create numerous job opportunities. But how do the projected figures stack up? Let’s delve into the details and visualize the potential impact of this initiative.

Visualizing the Impact

The bar chart provides a clear comparison between the current and expected values for investment, production value, and direct job creation under the PLI 2.0 scheme.

India’s PLI Scheme 2.0 for IT hardware, with a budget of Rs 17,000 crore and a 5% average incentive, aims to catalyze significant production growth and job creation, targeting a production value of $24 billion by 2025-26.

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A Peek into PLI 2.0

PLI 2.0 comes with an increased tenure of six years, during which it is expected to generate incremental production worth Rs 3.35 lakh crore. The government anticipates an investment of over Rs 2,430 crore and the creation of 75,000 direct jobs. When accounting for indirect jobs, the employment figure could reach 2 lakh. An interesting facet of the restructured scheme is the additional incentives for companies that locally manufacture certain components, including memory modules, solid-state drives, and display panels. The maximum incentive is capped at Rs 4,500 crore for global companies, Rs 2,250 crore for hybrid companies, and Rs 500 crore for domestic companies.

The Scheme: A Snapshot

The PLI Scheme 2.0 covers a wide range of IT hardware including laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices​2​. With a tenure of six years, the scheme aims to lead to incremental production of Rs 3.35 lakh crore and generate incremental direct employment for 75,000 people. When accounting for indirect jobs, the total employment figure could reach as high as 2 lakh.

Under the previous PLI scheme, an expected investment was pegged at Rs 2,500 crore. While the renewed plan has reduced this projection to Rs 2,430 crore, it’s important to note that these figures are tentative and greatly depend on the market environment.

The Incentives: Sweetening the Deal

The new scheme offers a more attractive incentive structure compared to its predecessor. Over the six-year period, the average incentive will be about 5%, a significant increase from the 2% offered over four years in the earlier scheme. Additional incentives are also on the table for companies that manufacture certain components, including memory modules, solid state drives, and display panels, locally.

Depending on the type of company, there are varying maximum incentives. For global companies, the cap is at Rs 4,500 crore, for hybrid entities (those with elements of both global and domestic businesses), the cap is at Rs 2,250 crore, and for domestic companies, the cap is at Rs 500 crore​​.

The Incentives: Sweetening the Deal

The IT hardware industry is targeted to reach a production value of $24 billion by 2025-26, with exports anticipated to be in the range of $12-17 billion during the same period. The revised PLI scheme is expected to serve as a major catalyst for both global and domestic companies aiming to establish or expand their IT hardware manufacturing operations in India​.

Interestingly, the scheme’s revamp has been well-received by major industry players. The Manufacturers’ Association For Information Technology (MAIT), which represents companies like Apple, Dell, HP, and Lenovo, had earlier called for increased incentives under the scheme. The association, along with other industry bodies, have welcomed the fresh changes.

Wrapping Up

The PLI Scheme 2.0 for IT hardware is a significant step forward in India’s bid to position itself as a global hub for electronics manufacturing. By offering attractive incentives and encouraging local production, the scheme is set to boost investment, spur job creation, and contribute to the country’s economic growth.

It remains to be seen how the implementation of this ambitious scheme unfolds in the coming years. Nevertheless, the initiative signals India’s commitment to strengthening its domestic IT hardware sector and contributing to its digital economy. As the country continues its journey towards becoming a major player in the global electronics landscape, the PLI scheme will undoubtedly play a pivotal role in this transformation.

MetricPLI 1.0PLI 2.0Expected Outcome by 2025-26
Budgetary OutlayRs 7,300 croreRs 17,000 croreN/A
Tenure4 years6 yearsN/A
Expected InvestmentRs 2,500 croreRs 2,430 croreN/A
Incremental ProductionN/ARs 3.35 lakh crore$24 billion
Direct Jobs CreatedN/A75,000N/A
Average Incentive2%5%N/A
Maximum Incentive (Global Companies)N/ARs 4,500 croreN/A
IT Hardware Industry ProductionN/AN/A$24 billion
ExportsN/AN/A$12-17 billion
“Expected Outcome by 2025-26” column showcases the goals set by the government and industry for the near future​.

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