The Cabinet on Wednesday approved a production linked incentive (PLI) scheme worth ₹7,350 crore for the next four years for laptops, tablets, all-in-one personal computers and servers.

The proposed scheme's total cost includes an incentive outlay of ₹7,325 crore and administrative charges of ₹25 crore.

Eligible companies would be incentivised four per cent to one per cent on incremental sales of goods manufactured in India (over the base year 2019-20), over the next four years, a government statement said.

Production worth ₹3.26 lakh crore and exports of ₹2.45 lakh crore are estimated over the next four years under the new scheme, which is expected to create 1.80 lakh jobs.

The PLI push for hi-tech IT hardware gadgets comes close on the heels of the Cabinet last week, clearing a ₹12,195 crore scheme for telecom equipment manufacturing. Last year, the Cabinet had approved.

"The scheme is likely to benefit five major global players and ten domestic champions in the field of IT hardware manufacturing, including laptops, tablets, all-in-one PCs, and servers. This is an important segment to promote manufacturing under AtmaNirbhar Bharat as there is huge import reliance for these items at present," Ravi Shankar Prasad, Minister for Communications and IT said here at the briefing after the Cabinet meeting.

The scheme will enhance the development of the 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, he said.

The scheme will provide impetus to domestic value addition for IT Hardware which is expected to rise to 20- 25 per cent by 2025 from the current 5-10 per cent, Prasad said. Currently, the laptop and tablet demand in India is met mainly through imports valued at ₹29,470 crore and ₹2,870 crore, respectively.

Currently, India's laptop and tablet demand is largely met through imports valued at $4.21 billion and $0.41 billion respectively in 2019-20. The IT hardware market is dominated by six-seven companies globally, which account for about 70 per cent of the world's market share.

These companies can exploit large economies of scale to compete in global markets. These companies must expand their operations in India and make it a significant destination for IT hardware manufacturing.

As per research firm IDC, PC shipments in India grew 27 per cent to 2.9 million units in the December 2020 quarter from 2.3 million units in the year-ago period. During the October-December 2020 quarter, the notebook segment grew 62.1 per cent year-on-year to contribute more than three-fourths of the total shipments of 2.9 million units.

On a full-year basis, the PC shipments -- comprising desktops, notebooks, and workstations -- stood at 10.27 million units. Dell occupied the top position with 27.5 per cent market share, followed by HP (26.7 per cent), Lenovo (18.4 per cent), Acer (8.5 per cent) and Asus (6.4 per cent).

According to analysts, the Cabinet decision on Wednesday is yet another step by the government to fulfil the vision of making India an electronic manufacturing hub for the world and increase India's manufacturing competitiveness.

"This scheme also promises a substantial increase in value addition which will further the components ecosystems," Kunal Chaudhary, Tax Partner, EY India, said.

"This is good to attract localisation of manufacturing in other product categories and not just mobile phones. Though mobiles will remain the largest opportunity, we need to have other product categories manufactured locally as well," Faisal Kawoosa, Founder and Chief Analyst at techArc, said.

 

 

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