Union Cabinet Approves Rs 17,000 Crore PLI 2.0 Scheme for IT Hardware

In a significant development, Prime Minister Narendra Modi-led Union Cabinet has given its approval to the Production Linked Incentive (PLI) Scheme for the IT hardware segment, with a substantial budget allocation of Rs 17,000 crore. This PLI Scheme 2.0 for IT Hardware aims to leverage the achievements of the PLI scheme implemented for mobile phones, which played a pivotal role in establishing India as the world’s second-largest mobile phone manufacturer. Notably, the exports of mobile phones have also surpassed a significant milestone of $11 billion (equivalent to around Rs 90 thousand crores) this year.

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Context:

Over the past 8 years, the electronics manufacturing industry in India has experienced consistent growth, achieving a commendable Compound Annual Growth Rate (CAGR) of 17%. This year, it has surpassed a significant production milestone, reaching 105 billion USD (equivalent to about Rs 9 lakh crore).
India has successfully emerged as the world’s second-largest manufacturer of mobile phones, highlighting its prowess in the electronics manufacturing sector. Notably, the exports of mobile phones have also reached a remarkable milestone of 11 billion USD (about Rs 90 thousand crores) this year.
India is attracting the attention of the global electronics manufacturing ecosystem, positioning itself as a prominent player in the field. The country is rapidly emerging as a major hub for electronics manufacturing, capitalizing on the opportunities presented by the industry.
Building upon the achievements of the Production Linked Incentive (PLI) scheme implemented for mobile phones, the Union Cabinet has given its approval to PLI Scheme 2.0 for IT hardware. This decision further strengthens the government’s commitment to promoting and supporting the growth of the IT hardware manufacturing sector in India.

Salient features:

The PLI Scheme 2.0 for IT hardware encompasses a wide range of products including laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices.
The scheme has a budgetary allocation of Rs. 17,000 crores, signifying a significant financial commitment toward promoting the IT hardware sector.
The duration of this scheme is set for 6 years, providing a long-term framework to drive growth and development in the IT hardware industry.
It is anticipated that the implementation of this scheme will result in an incremental production value of Rs. 3.35 Lakh crore, showcasing the potential for substantial growth and expansion within the sector.
The scheme aims to attract incremental investments amounting to Rs. 2,430 crores, facilitating the infusion of capital into the IT hardware manufacturing ecosystem.
As a consequence of the scheme’s implementation, it is projected that there will be an incremental direct employment generation of 75,000 jobs, contributing to the enhancement of employment opportunities within the IT hardware sector.

Significance:

India is rapidly gaining recognition as a reliable supply chain partner for prominent global companies. Leading IT hardware corporations have expressed significant interest in setting up manufacturing units within the country. This positive trend is reinforced by the robust IT services industry, which experiences substantial demand domestically. Major companies aspire to serve both the domestic market in India and utilize the country as an export hub for their products.

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