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NEW DELHI : Nineteen companies have applied to avail the benefits of the government’s production-linked incentive (PLI) scheme for manufacturing IT hardware in India, the Centre said on Tuesday.

The scheme was announced in March and is similar to the one announced last year for the local manufacture of mobile phones.

The applicants for IT hardware production include 15 domestic companies and four global firms.

Along with multinationals Dell, Wistron, Rising Stars Hi Tech (a Foxconn subsidiary) and Flextronics, domestic manufacturers such as Lava, Micromax, Dixon Technologies, Infopower, Syrma Technologies, Neolync Electronics, Optiemus Infracom, Netweb Technologies, Smile Electronics, Panache Digilife and RDP Workstations have expressed their interest to manufacture IT hardware components such as laptops, tablets, all-in-one personal computers (AIOs) and servers.

The PLI scheme for IT hardware offers an incentive of 2-4% on net incremental sales of goods over the base year of 2019-20. The benefits will be available till 2024-25, starting 1 April 2021.

According to government estimates, companies eligible for the scheme will be producing IT hardware worth 1.6 trillion over the next four years. Out of this, exports will account for 37% or 60,000 crore.

The government said that the scheme will facilitate investments worth 2,350 crore in India’s electronics manufacturing space and generate 37,500 direct employment opportunities.

India’s domestic value addition in IT hardware manufacturing is expected to grow from 5-12% to 16-35% over the next four years, it added.

“The world is looking at India as a destination to manufacture, and participation in the scheme by global companies is a resounding vote of confidence to the current government’s policies," said Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), the apex industry body for homegrown electronics companies.

While the industry welcomed the move, global supply of chips and other components have affected the ability of local manufacturers to meet the target set under the scheme.

The ICEA had written to the government in March, requesting to revise the base year for paying PLI benefits to 2020-21 instead of 2019-20.

The industry body said that 15 out of the 16 PLI applicants for producing mobile phones will not be able to meet the targets required under the scheme.

Unlike the PLI scheme for IT hardware, the incentives for the mobile manufacturing scheme were to be paid out from 2020.

According to an industry executive, the matter is currently under review at the ministry of electronics and information technology (MeitY), and the government hasn’t said no to reviewing the base year yet.

According to a report from Counterpoint Research, the global chip shortage may extend further since Taiwan, which accounts for nearly 70% of all chip manufacturing, is facing its worst drought in more than 56 years.

“Taiwan dominates semiconductor production globally due to its unique position in the foundry and outsourced assembly and testing (OSAT) industry. Semiconductor mass production also uses some of the most advanced technologies, which make setting up a production unit a high-investment and time-consuming affair. This is why the current drought in Taiwan has set alarm bells ringing the world over," wrote Brady Wang, semiconductor analyst at Counterpoint Research, in a blog post.

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