Govt makes renewed push to boost hardware manufacturing

Telecom minister Ashwini Vaishnaw said the scheme would attract top hardware companies such as HP, Dell and Apple to India.

“HP, Dell, Acer and others already have high volumes (market) in India. Apple is niche. The market is attractive; they’re also very seriously evaluating," he said in response to a question during a press briefing. Several companies welcomed the scheme, with some saying they are already evaluating availing of the scheme.

The revised scheme will offer an incentive of 5% on net incremental sales over the base year, of goods manufactured in India, compared to 2% earlier, where the base year can be chosen starting from will be FY23. The scheme also provides for flexibility as the investments can be done over six years, instead of four years earlier.

Companies signing up for the scheme will get an additional optional incentive—of another 3%—if they use India-made and designed components, sub-systems or inputs. Also, the companies can take Indian contract manufacturers on board and avail of incentives if the contractors are producing for a single company.

“We’re confident that the changes made in the revised scheme will attract all the major IT hardware players to set up shop in India," Vaishnaw said. He added that the revised PLI scheme was a result of extensive consultations with the industry over the past several months, from which the government is expecting incremental production worth ₹3.35 trillion and incremental investment of ₹2,430 crore, generating direct employment of 75,000.

The minister added that investments from Chinese manufacturers would also be allowed in accordance with existing regulations.

“There is a significant change in mindset. About 10 years back, the mindset was of import substitution, now the mindset is export-led growth, which means you’re setting up a plant in India to not only cater to Indian demand but also to global demand," he added. He also noted that local production would lead to less expensive products for Indian consumers.

Vaishnaw said that the government had used its experience from the telecom and mobile phone PLIs, which have brought in investments of more than ₹3,600 crore and created millions of jobs over the past two years. India has become the world’s second-largest manufacturer of mobile phones, and exports of mobile phones crossed $11 billion this year.

Electronics manufacturing in India has witnessed consistent growth of 17% CAGR in the last eight years, he said, noting that in FY23, it crossed production of $105 billion.

Qualcomm, contract manufacturer Optiemus Electronics and industry associations welcomed the scheme.

“PLI 2.0 will accelerate the domestic IT Hardware manufacturing ecosystem in India and enable businesses to grow beyond regional markets. It will enhance India’s position as a global technology hub for companies to drive India-designed IP and explore new growth avenues," said Rajen Vagadia, vice-president of Qualcomm India Pvt. Ltd and president, Qualcomm India and Saarc.

“We’re manufacturing IT hardware for many reputed brands under the current PLI, and with PLI 2.0, we are actively considering options to participate in this new phase of growth in electronics manufacturing," said A. Gururaj, managing director of Optiemus Electronics.

Pankaj Mohindroo, chairman of the India Cellular and Electronics Association, said the scheme would foster domestic manufacturing and benefit major global manufacturers of IT hardware products  a significant portion of which is currently being imported. “This is an opportune moment to shift IT hardware manufacturing towards India," he said.

“The scheme covers all aspects of semiconductor manufacturing... astutely and comprehensively. The policy is valid for six years with clear incentives, thresholds, domestic, hybrid and global categorization, selection criterion and timelines," said Anurag Awasthi, vice president of India Electronics and Semiconductor Association.