IT Hardware PLI: Centre Seeks Estimates Following Industry’s Demand To Hike Outlay

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The industry is reportedly requesting the outlay to be hiked to Rs 15,000 crore and raise the incentive rate to 5 per cent

After repeated urges from the industry to increase the outlay for the production-linked incentive (PLI) scheme for IT hardware, the government has finally sought estimates of production, exports and the nature of value addition that result from the expansion of the incentive outlay. 

Citing a senior official, the Economic Times said the final decision will be taken only after cabinet minister Ashwini Vaishnav, who holds the IT portfolio along with telecom and railways, meets the industry representatives.

The industry is reportedly requesting the outlay to be hiked to Rs 15,000 crore and raise the incentive rate to 5 per cent.

“We have approached MeitY for a relook at the PLI as in its current form it fails to attract the investments and products from global value chains to the full possible potential,” George Paul, CEO of the Manufacturers’ Association for Information Technology (MAIT), told the publication.

Last week, MAIT, which has Acer, Cisco, Dell, HP, Intel and Samsung among others as its members, meet with the newly appointed IT minister, Rajeev Chandrasekhar, seeking an expansion of the current outlay along with hiking the incentive rate to 5 per cent from the current average of 2.3 per cent annually. The body also pushed for increasing the span of the scheme to eight years from four now.

MAIT, along with other industry leaders, discussed ways to accelerate demand generation, create hubs for electronics, repair & calibration operations, inward and outward processing, building a component manufacturing base in India, and enablement of PLI to grow exports and make it a success. 

According to the industry, the scheme in its current form is inadequate to make India a production and export hub. The scheme aims to end India’s dependence on imports, which are a whopping $4.21 billion for laptops, while a very little value of India’s total demand of $4.85 billion is currently manufactured in the country. Similarly, in tablets, $0.41 billion of India’s total market of $0.50 billion is imported.

Through the PLI scheme, the government hopes to not just offset the imports but also capture a fair share of the global market, which was pegged at $240.99 billion in 2019 for laptops.

However, as per the applications, global manufacturing giants Dell, Flextronics, Foxconn and Wistron have so far promised only 40 per cent of the total production and incentives permitted under the scheme, underscoring the failure of the plan to attract top dollar investments. In fact, the five slots for foreign manufacturers saw only four applicants.

In what industry players saw is an admission of sorts, the government slashed its own production and exports estimates through the IT hardware PLI from Rs 3.26 lakh crore and Rs 2.45 lakh crore in its February announcement to Rs 1.61 lakh crore and Rs 60,000 crore, respectively.

The IT hardware PLI scheme extends incentives between 4 per cent and 1 percent on net incremental sales (over base year i.e. 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four years.

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