Central Idea

The Union Cabinet has approved an updated version of the Production Linked Incentive (PLI) scheme for IT hardware manufacturing.

PLI Scheme for IT Hardware

The PLI scheme for IT hardware was initially introduced in March 2021.
It provides incentives of over 4% for incremental investment in domestic manufacturing for eligible companies, such as Dell and Flextronics.
The scheme aims to boost domestic manufacturing, increase exports, and make India a prominent player in the IT hardware sector.
The scheme will have a tenure of six years, providing a long-term incentive for eligible companies to invest in domestic IT hardware manufacturing.

The government highlighted the growth of electronics manufacturing in India.
There is a 17% compound annual growth rate over the past 8 years and a production benchmark of $105 billion, including $11 billion in mobile phone exports.

The budgetary outlay for the PLI scheme for IT hardware manufacturing has been set at ₹17,000 crore.
The incentive rate has been increased to 5%, offering a higher benefit to companies investing in domestic manufacturing.
An additional optional incentive has been introduced for using domestically produced components, although the specific rates of these incentives are not specified.
If the optional incentives are utilized as intended, the total incentive under the scheme could amount to 8-9%.

Telecom hardware manufacturing has surpassed the projected ₹900 crore and reached ₹1,600 crore.
Some Indian companies have become significant exporters of complex radio equipment worldwide.