PLI for IT hardware: Draft proposes raising financial outlay by 2.5 times

The government is likely to sweeten the production-linked incentive (PLI) scheme for IT hardware, the Economic Times reported.

Earlier, Ministry of Electronics and Information Technology (MeitY) held discussions with global IT hardware makers who are looking to move part of their production capacity from China to India. Taking forward these discussions Meity drafted a draft PLI scheme to woo IT hardware manufacturers. 

The government in its draft policy has proposed to increase the scheme’s financial outlay by 2.5 times to around Rs. 19,000 crore. It also proposes to double the incentive rates to attract multinational companies such as Dell, HP, Apple, Samsung and Asus to increases manufacturing in India.

Also Read: What are the challenges facing the PLI scheme?

PLI for IT Hardware 2.0, the draft revised PLI scheme, is now set to be circulated among major stakeholders for feedback. 

The reworked scheme aims to provide incentives of 4-5.75% over five years, against 1-4% over a tenure of four years at present. Its financial outlay will touch about Rs 19,000 crore, from Rs 7,350 crore, according to the report.

After being discussed with the industry the revised scheme will be placed before Cabinet for approval. PLI 2.0 will be applicable to all companies selected under the current scheme.

The average incentives for companies have been increased to 5.34% from 2.21% over five years according to the report.

However, the conditions for availing scheme’s benefits will remain the same. This includes incorporation of localisation of components.

According to the localisation schedule, to avail a 4% benefit in the first year of the scheme, firms need a domestic printed circuit board assembly (PCBA) line.

Along with PCBA, batteries must also be locally sourced in the second year. In the third year, power modules are a part of local component. And in fourth and fifth years, four components must be sourced locally.