The Indian government’s recent move to approve 27 companies, including tech giants like Dell, Foxconn, Lenovo, and HP, under the new Production-Linked Incentive (PLI) Scheme for IT hardware marks a significant stride towards enhancing domestic manufacturing and reducing dependency on imports.
- Scheme Approval: 27 companies have been approved under the new PLI scheme, signaling a robust push by India to establish itself as a global hub for high-tech manufacturing.
- Investment and Focus: The scheme envisages an investment of Rs 3,000 crore, focusing on manufacturing PCs, servers, laptops, and tablets.
Expected Economic Benefits
- Boost to the IT Hardware Industry: The PLI Scheme 2.0, with a budgetary outlay of ₹17,000 crore, aims to revitalize the IT hardware sector, encompassing laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices.
- Job Creation: It is expected to create 75,000 direct and over 200,000 indirect jobs, significantly enhancing employment opportunities.
- Multiplier Effect on Allied Industries: The scheme is likely to benefit allied industries like software development, e-commerce, and logistics-supply chain-vendors.
- Focus on Specialized Hardware and AI: It opens avenues for the growth of specialized AI hardware, essential for managing large data volumes from 5G devices and applications.
- Incremental Production and Investment: The scheme anticipates an incremental production of IT hardware worth ₹3.35 lakh crore and an incremental investment of ₹2,430 crore, which could significantly boost economic growth.
Broader Impact on the Indian Economy
- Enhancing India’s Manufacturing Capabilities: The scheme aims to deepen India’s manufacturing ecosystem by promoting localization of components and sub-assemblies.
- Export Enhancement: It’s expected to enhance exports, positioning India as a trusted global supply chain partner.
- Digital Economy Growth: The scheme could propel India’s digital economy towards being $1 trillion by 2025 and align with the goal of achieving $300bn worth of electronics manufacturing and exports by 2025-2026.
- Encouraging Electronics Manufacturing: Given India’s growing stature in electronics manufacturing, the scheme could further incentivize this sector, especially with the ongoing rollout of 5G and the proliferation of IoT devices.
Future Outlook
- Long-Term Vision: The PLI 2.0 Scheme, slated for a duration of six years, aligns with India’s broader ambitions in the field of electronics manufacturing and global IT hardware production.
- Continued Growth: The consistent growth of electronics manufacturing in India, with a 17% CAGR over the last eight years, sets a promising stage for the success of this scheme.
The new PLI scheme for IT hardware is a significant step towards realizing India’s aspirations of becoming a self-reliant, global manufacturing powerhouse in the IT hardware sector. With its focus on investment, job creation, and boosting the domestic and export markets, the scheme is poised to have a transformative impact on the Indian economy. As we move forward, it will be interesting to observe how these initiatives translate into tangible growth and development in the IT hardware industry.