The Ministry of Electronics and Information Technology (MeitY) outlay for Digital India programme in the Budget for 2022-23 jumped 67.13 per cent. Around ₹10,676.18 crores has been allocated this year for the programme, up from ₹6,388 crores last year.

This is a significant increase given that the total budget allocation for MeitY stood at ₹14,300 crore for 2022-23 against ₹9,581.25 crore in 2021-22.

This was driven by the introduction of Production Linked Incentive (PLI) for large scale electronics and IT hardware which alone was allocated ₹5,300 crore. PLI schemes were announced across 14 sectors last year, out of which nearly five-six of them including semiconductor manufacturing were to boost various electronics manufacturing.

According to the Economic Survey 2022, as of June 2021 Quarterly Revenue Recover (QRR), the PLI Scheme for large-scale electronics manufacturing had resulted in investment of ₹2,595 crore and production worth ₹67,275 crore of which, 31 per cent or ₹20,568 crore was exported.

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“Electronics hardware is one of the major pillars for Atmanirbhar Bharat. It is one of the largest import bills for the country, hence it is strategic in nature as electronics is needed for producing every product,” George Paul, CEO, Manufacturers Association of Information Technology (MAIT), told BusinessLine.

SMB-led manufacturing strategy

According to Paul, under PLI, India had adopted a demand and SMB-led manufacturing strategy. India wants to bring in large scale product manufacturing in the country. This in turn will then trigger demand for further upstream value addition.

The current outlay is against the manufacturing work projected for 2022-23 and will be increased in the coming years depending on the progress and needs of the companies.

Paul added, “Electronic hardware manufacturing needs capability and capacity building. Companies will invest in setting up manufacturing facilities and the budget allocation has been done against the projected manufacturing from the industry that has committed to bring in the manufacturers. These schemes came out in the last 12 months, and to set up the factories, it will take another 12-18 months. The government has been closely working with the companies keeping in pace with their readiness to start manufacturing.”

“This budget allocation is in continuation to earlier PLIs such as for mobile phones. The government tries to decrease dependency for manufacturing on the countries. This has been happening for a few years now. These PLI will helping in setting up research, manufacturing and supply chains here. This will help us evolve as a global manufacturing hub and also in revenue generation and job creation,” Upasana Joshi, Research Manager, Client Devices, IDC India, told BusinessLine.

“Last year, even companies like Apple weren’t able to reach their manufacturing targets due to ongoing supply chain constraints. It was a global phenomenon and we (India) are still developing in the manufacturing space. And also, lack of constant water supply and electricity supply have also been key hindrances in setting up units here,” she added.