Dell, Micromax Likely To Be Only Companies To Meet FY21 Targets Under IT Hardware PLI: Report

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Some companies blamed inadequate sops under the scheme while others pointed to the continuing global supply chain issues and chip shortages, for hurting their local manufacturing plans

Despite the high hopes held for the results of the production-linked incentive (PLI) scheme for IT hardware, only a handful of the 14 companies approved under the scheme are likely to meet their first year targets for the fiscal year 2021.

As per a report by the Economic Times, only Dell and Micromax are likely to meet their targets. As per the publication’s sources, Dixon Technologies may also just “scrape through” to meet the first-year target.

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Earlier last year, the government notified the hardware PLI scheme with an incentive corpus of Rs 7,350 crore under which 14 companies were chosen.

Among the global companies were Dell, ICT (Wistron), Flextronics and Bharat FIH — formerly known as Rising Stars Hi-Tech (Foxconn) – to produce laptops, tablets, all-in-one personal computers (PCs) and servers. Under the domestic category, 10 companies, namely Lava, Dixon Technologies, Infopower Technologies (JV of Sahasra and MiTAC), Bhagwati (Micromax), Neolync, Optiemus, Netweb, Smile Electronics, VVDN and Panache Digilife were approved.

International companies need to record net incremental sales of Rs 1,000 crore to be eligible for the first-year incentive of 4% in cash backs, while for local companies, the target was Rs 50 crore.

Some companies blamed inadequate sops under the scheme while others pointed to the continuing global supply chain issues and chip shortages, for hurting their local manufacturing plans.

The companies, through industry bodies India Cellular & Electronics Association (ICEA) and Manufacturers Association for Information Technology (MAIT), have sought more than tripling of the total incentive corpus to around Rs 20,000 crore and increasing the average rate of incentive from 2.3% to 5%.

They said that the sops do not compensate for the disabilities of shifting production to India of duty-free products like laptops, tablets and data servers from countries like China, Taiwan and Vietnam.

The scheme had received a poor response since its notification with the 14 companies approved under the scheme cumulatively committing to produce far lower than expected by the government.

They had pledged to produce goods only up to minimum eligibility threshold or goods worth Rs 1.60 lakh crore, including Rs 60,000 crore of exports over the 4-year period of the scheme. This was sharply lower than the government’s initial estimate of achieving production output worth Rs 3.26 lakh crore, of which exports were expected to be worth Rs 2.45 lakh crore.

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