Electronics manufacturing in India has witnessed consistent growth, with a 17 per cent CAGR in the last 8 years and has become the world’s second-largest manufacturer of mobile phones. To speed up domestic production of high-tech electronics, the Union Cabinet on May 18 approved the second phase of the Production Linked Incentive (PLI) scheme 2.0 for IT hardware.
Following a meeting of the Cabinet chaired by Prime Minister Narendra Modi, Union Minister Ashwini Vaishnaw announced that manufacturing of high-tech electronics like laptops, personal computers (PCs), all-in-one computers, servers, and ultra-small form factor devices would be covered by the PLI, which will be funded with 17,000 crores over six years.
This scheme is expected to generate an incremental production worth Rs 3.35 lakh crore over six years. In addition, it is expected to give employment to 75000 people.
Earlier, a few years back, the mindset was into “import substitution”. “Now the mindset has shifted. It is about catering to the global demand,” said Vaishnaw.
According to Vaishnaw, the former scheme only offered a 2% reward. Now under the new scheme, businesses will receive an incentive of up to 5% and an additional optional incentive of 4% if they employ domestically produced components.
India is emerging as a trusted supply chain partner for all global majors. Vaishnaw said that companies with high-volume sales, such as Apple, Dell, Asus, and Acer, are seriously evaluating and interested in the scheme. This is also bolstered by the robust IT services, which have a strong domestic demand.
Most multinational corporations want to turn India into an export hub by establishing a manufacturing facility while will also cater to domestic markets within India.
PLI: Production Linked Incentive Scheme
In addition to the latest reforms list, the PLI scheme is introduced under the ‘Aatmanirbhar Bharat Abhiyan’ initiative. The scheme aims to make domestic manufacturing globally competitive. The strategy behind the PLI scheme is to offer companies incentives on incremental sales from products manufactured in India over the base year.
They have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve the cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports.
The scheme also invites foreign companies to set up units in India. It encourages local companies to set up or expand existing manufacturing units, generate more employment and reduce the country’s reliance on imports. This PIL scheme covers various industries, such as Textiles, Automobiles, IT hardware etc.