PLI scheme 2.0: Dixon Technologies commits output worth Rs 45K crore

Company also in talks with Lenovo to be their contract manufacturer

Dixon Technologies, the country’s largest home-grown electronics manufacturing services (EMS) player, has committed a cumulative production value of Rs 48,000 crore in six years and has been declared eligible under the reworked production-linked incentive (PLI) scheme for IT products.   

With this move, the company, which applied for the PLI scheme through Padget Electronics, will account for a seventh of the additional production value of Rs 350,000 crore which the government said has been committed collectively by 27 eligible companies in six years.

Confirming their plan, Sunil Vachani, managing director of Dixon Technologies, said: “We had applied under the hybrid domestic category and have committed cumulative production value of Rs 48,000 crore over six years, starting FY24-25, and an investment of Rs 250 crore. In the first year, our focus will be on final assembly and PCBA (printed circuit board assembly) and later we will get into components like batteries, chargers, display cabinets, etc.”   

According to sources, the company, which makes laptops for Taiwanese laptop giant Asus, is in talks with Chinese laptop maker Lenovo and other players to be their contract manufacturer. It is also believed that Foxconn’s Rising Stars Mobile India has started preliminary discussions with Lenovo. After HP, the Chinese firm is the second largest personal computers player in India. In an interview with Business Standard earlier, communications minister Ashwani Vaishnaw had said that Chinese IT products firms can also participate in manufacturing by tying up with an Indian company to assemble products for them. 

Rising Stars, Dixon, or Lenovo did not respond to queries on this specific question. The other big players in the country which are eligible for the PLI scheme include US-based Flextronics whose facility is used for assembling laptops, mini desktops, and so on, for HP. It will now add Google Chromebook to its kitty. It is believed that some of the Japanese laptop firms like Toshiba may also look for an Indian partner.

A promoter of one other homegrown Indian EMS player, which is also eligible, says: “There is a premium market for laptops which is where the big global and Indian EMS players will play. But there is a large mass market for basic laptops which is between Rs 10,000 to Rs 15,000, where companies like us will play. And we are seeing huge demand from brands to come to the country”.       
 

The government has not only tweaked the new PLI scheme for IT products but has nearly doubled the incentive to Rs 17,000 crore. This is after the first offer met with a lukewarm response. To put into perspective, India’s demand for IT products (mainly laptops, all-in-one PCs, tablets and servers) is estimated to be between $8-10 billion a year, the bulk of which is imported mostly from China. Even assuming that the entire commitment under the scheme by all the 27 players is cumulatively achieved in 6 years ($42 billion), India will still have to import laptops and PCs worth over $10-18 billion in the same period.

Looking at it from another angle, what 27 companies have committed to achieve in the production value of IT products in six years will be achieved by just one company, Apple Inc, through its vendors in just 5 years under the PLI scheme for mobile devices. 

Based on their commitments and their plan, they are expected to hit a collective production value of $40 billion in five years ending in FY27.

Subsidy boost
 

With an allocation of Rs 17,000 crore, the government has cleared 27 companies under PLI 2.0

Firms together have committed an incremental investment of Rs 3,000 crore

Dixon will start production from FY25 and assemble a range of products from laptops, PCs, tablets

Foxconn’s Rising Stars Mobile India has started preliminary discussions with Lenovo