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“We at Dixon would be looking at making an investment of Rs 250 crore that is required as part of the scheme, and maybe even more, over a period of six years,” said Sunil Vachani, CMD, Dixon Technologies.
He added that IT hardware is a large import category with the value of inbound shipments touching $6 billion annually. The revised scheme will help in substituting imports and make sure whatever sold in India is made in India.
The union cabinet Wednesday approved a budgetary outlay of Rs 17,000 crore for the IT hardware PLI 2.0, up from Rs 7,350 crore in the previous version of the scheme, for a period of six years. The previous version of the scheme, announced in 2021, had failed to take off with only Dell, Bhagwati (Micromax), and Dixon Technologies were able to meet the first year (FY22) targets.
Higher incentives
The revised scheme now outlays an incentive of 5% – compared with around 2% in the initial plan – for meeting incremental production and investment targets, along with optional additional incentive for localisation.
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“With the budget outlay increased, the scheme focuses on value addition, and a new hybrid category is there as part of the scheme will allow any domestic company which wants to invest in larger numbers and do larger volumes will have the option to do so,” Vachani said.
Global PC brand HP said it has been engaging with the government ahead of the announcement and has had a long history of manufacturing in India.
“We are currently evaluating details of the programme along with its potential benefits to HP and its customers,” HP India said in a statement.
A. Gururaj, managing director of homegrown contract manufacturer Optiemus, which is already making IT hardware for brands under the current PLI scheme, said the company will be “actively considering and evaluating their options to participate in this new phase of growth in electronics manufacturing.”
Ali Akhtar Jafri, director general, Manufacturing Association For Information Technology (MAIT), added that the industry body is confident that the revised PLI scheme will boost manufacturing in India to both meet domestic demand and also boost export as has been achieved in the case of the mobile phone PLI.
Another industry body, India Cellular and Electronics Association (ICEA) estimates the IT hardware industry including both global and domestic companies, catalysed by the revised scheme, is targeted to reach a production of $24 billion by 2025-26, with exports anticipated to be in the range of $12-17 billion in the same period.
‘Factory to the World’
“This is an opportune moment to shift IT hardware manufacturing towards India. The momentum gained by the mobile phone industry will likely create a snowballing effect on IT Hardware,” said Pankaj Mohindroo, chairman, ICEA.
He added that the new scheme will not only boost domestic manufacturing but also likely benefit major global manufacturers of IT hardware products such as laptops and tablets. “We urge the global industry to acknowledge this and consider India as a crucial destination for manufacturing IT hardware products”.
Semiconductor company Qualcomm said the revised scheme will accelerate the domestic IT hardware manufacturing ecosystem and enable businesses to grow beyond regional markets.
“It will enhance India’s position as global technology hub for companies to drive India-designed IP and explore new growth avenues,” said Rajen Vagadia, VP, Qualcomm India.
The government expects incremental production of Rs 3.35 lakh crore on the back of incremental investment of Rs 2,430 crore creating 75000 incremental direct jobs as a result of the scheme.
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