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PLI FOR IT HARDWARE

Cabinet approves Production Linked Incentive Scheme for IT Hardware.

Background:

• The vision of the National Policy on Electronics 2019 is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.
• Currently, the laptop and tablet demand in India is largely met through imports valued at USD 4.21 billion and USD 0.41 billion respectively in 2019-20.
• The market for IT Hardware is dominated by 6-7 companies globally which account for about 70% of the world’s market share.
• These companies are able to exploit large economies of scale to compete in global markets.
• It is imperative that these companies expand their operations in India and make it a major destination for manufacturing of IT Hardware.
• Manufacturing companies across the globe are looking to diversify their manufacturing locations to mitigate the risk involved in depending on a single market.

Features of the scheme:

• The scheme proposes production linked incentive to boost domestic manufacturing and attract large investments in the value chain of IT Hardware.
• The Target Segments under the proposed Scheme include Laptops, Tablets, All-in-One PCs and Servers.
• The Scheme shall extend an incentive of 4% to 2% / 1% 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.
• This is an important segment to promote manufacturing under AtmaNirbhar Bharat as there is huge import reliance for these items at present.

Benefits:

• The scheme will enhance the development of electronics ecosystem in the country.
• India will be well positioned as a global hub for Electronics System Design and Manufacturing (ESDM) on account of integration with global value chains, thereby becoming a destination for IT Hardware exports.
• The scheme has an employment generation potential of over 1,80,000 (direct and indirect) over 4 years.
• The Scheme will provide impetus to Domestic Value Addition for IT Hardware which is expected to rise to 20% – 25% by 2025.

SOURCE: THE ECONOMIC TIMES