China play in PLI 2.0: Dixon wins deal to make laptops for Lenovo

Home-grown player Dixon Technologies has won a manufacturing contract to make laptops and notebooks for Chinese major Lenovo in India under the production-linked incentive scheme (PLI) 2.0.  

Dixon, a player in the electronics manufacturing services space, has won the contract through Padget Electronics, a fully-owned subsidiary. It plans to set up a new plant in Noida to assemble the products and roll out Lenovo laptops by May 2024. Company executives said that discussions related to the size of the contract and specific models are on. Dixon is investing Rs 250 crore in the plant, which will have a capacity to churn out over 1 million laptops annually.    

Dixon was one the of the players declared eligible under the revamped PLI scheme recently.  It also has a contract with Taiwanese PC maker Acer to assemble its products in the country. The company expects the contract size to increase from the current 150,000 laptops a year.   

Currently, Lenovo makes laptops in its plant in Puduchury and tablets in a tie-up with Wingtech Technology in Tirupati. Its smartphones for Motorola (a Lenovo group company) are locally manufactured by Dixon in Noida under the PLI scheme for mobile devices.   

Lenovo is the second largest PC company in the country behind HP. Based on IDC figures, it had a market share of 17 per cent in the third quarter of 2023, with HP at the top with a share of 29. 4 per cent. The third largest player is Dell (14.6 per cent), followed by Asus (12.5 per cent) and Acer (11.6 per cent).

Dixon has committed a cumulative production value of Rs 48,000 crore in six years under the PLI scheme for IT hardware, according to sources. As a result, Padget will account for a seventh of the additional production value of Rs 350,000 crore which the government said has been committed collectively by the 27 eligible PLI players in six years.  

Earlier, communications minister Ashwani Vaishnaw had told Business Standard in an interview that Chinese companies would be allowed to participate in the PLI scheme in tie-up with Indian players in the electronics manufacturing space for assembling laptops and PCs.

Under the revamped PLI, the government has increased the allocation for incentives to Rs 17,000 crore and the tenure from four to six years to make it more attractive for potential players. India imports over $8-10 billion worth of PCs and mostly from China. The new revamped PLI is focused towards import substitution initially but  exports are expected to follow as supply chains are being strengthened.