Centre more than doubles outlay on PLI for IT hardware to ₹17,000 crore

Announcement comes on the back of 17% CAGR in electronics manufacturing, says government; improvements to scheme based on feedback from industry on the earlier version, says Minister for Communications, Electronics and IT Vaishnaw

The Union Cabinet on Wednesday approved an updated Production Linked Incentive (PLI) scheme for IT hardware manufacturing, with the total budgetary outlay more than doubled to ₹17,000 crore, Minister of Electronics and Information Technology Ashwini Vaishnaw announced.

“Electronics manufacturing in India has witnessed consistent growth with 17% CAGR in [the] last 8 years,” the government said in a statement. “This year it crossed a major benchmark in production – $105 billion.” India crossed $11 billion in mobile phone exports, and was now the second-largest mobile handset maker behind China, the government said.

The PLI scheme for IT hardware, first notified in March 2021, provides upwards of 4% in incentives for incremental investment in domestic manufacturing for eligible firms, which include companies like Dell and Flextronics.

“Based on industry feedback on improving... the scheme, the Cabinet has approved the changes,” Mr. Vaishnaw said. For instance, he said, the incentive had been increased to 5%. An “additional optional incentive” has also been introduced for using domestically produced components. While Mr. Vaishnaw did not specify the rates of these optional incentives, he said that if they were availed as “envisioned,” the total incentive would amount to 8–9%.

Telecom hardware manufacturing had exceeded the projected ₹900 crore and reached ₹1,600 crore. “Two of those companies have become very important exporters in the world for complex radio equipment,” the Minister added.