PLI 2.0 for IT hardware: Centre approves revised PLI scheme with Rs 17,000 cr outlay
26-08-2023
12:32 PM
1 min read
What’s in today’s article?
- Why in News?
- The Production Linked Incentive (PLI) Scheme
- News Summary Regarding PLI scheme for IT hardware
Why in News?
- The Union Cabinet cleared a revised production linked incentive (PLI) scheme for IT hardware with an outlay of Rs 17,000 crore, more than doubling the budget for the scheme that was first cleared in 2021.
- The IT hardware industry is targeted to reach a production of $24 billion by 2025-26, with exports anticipated to be in the range of $12-17 billion during the same period.
The Production Linked Incentive (PLI) Scheme:
- A cornerstone of the Government’s push for achieving an Atmanirbhar Bharat, the objective of the PLI Schemes is to
- Make domestic manufacturing globally competitive
- Create global Champions in manufacturing and
- Generate employment opportunities for the country’s youth.
- The strategy behind the scheme is to offer companies incentives on incremental sales from products manufactured in India, over the base year.
- They have been specifically designed to
- Boost domestic manufacturing in sunrise and strategic sectors,
- Curb cheaper imports and reduce import bills,
- Improve cost competitiveness of domestically manufactured goods, and
- Enhance domestic capacity and exports.
- The first three PLI Schemes were approved earlier in March, 2020 and these were followed by another 10 New PLI Schemes in November, 2020.
- The Union Budget 2021-22, announced an outlay of INR 1.97 Lakh Crores for the PLI Schemes for 13 key sectors.
- This means that minimum production in India as a result of PLI Schemes is expected to be over US$ 500 billion in 5 years.
News Summary Regarding PLI scheme for IT hardware:
- The PLI for IT hardware:
- It was first announced in February 2021 with an initial outlay of around Rs 7,300 crore over a period of four years.
- Domestic players investing Rs 20 crore and clocking sales of Rs 50 crore in the 1st year, Rs 100 crore in the 2nd, Rs 200 crore in the 3rd, and Rs 300 crore in the final year, would pocket incentives of 1-4% on incremental sales over 2019-20.
- The first version of the scheme was a laggard with only two companies - Dell and Bhagwati - managing to meet first year’s (FY22) targets, and the industry calling for a renewed scheme with an increased budgetary outlay.
- The PLI 2.0 for IT hardware:
- According to the MeitY, the PLI 2.0 (outlay - Rs 17,000 crore) could attract big global IT hardware manufacturers to shift their production base to India and give a boost to local production of laptops, servers, personal computers, etc.
- It will be implemented from July 1, with a cap on maximum incentives available to participating companies.
- The tenure of the new scheme has been fixed for six years and the Centre is expecting an investment of over Rs 2,430 crore as part of it.
- The expected incremental production value could touch Rs 3.35 lakh crore, and the scheme could generate 75,000 direct jobs [could touch 2 lakhs when accounted for indirect jobs].
- The average incentive over six years will be about 5% compared with the 2% over four years offered earlier.
- This scheme will play a key role in catalysing India’s Techade and in achieving the $1 trillion digital economy goal - including $300 billion of electronics manufacturing by 2025-26.
Q1) What is the National Logistics Policy?
It was launched in 2022 with the aim to lower the cost of logistics and lead it to par with other developed countries. It is a comprehensive effort to address cost inefficiency by laying down a framework for developing the entire logistics ecosystem.
Q2) What is the PM Gati Shakti National Master Plan (NMP)?
It is a GIS based platform with portals of various Ministries/Departments of Government, launched in 2021. It is a transformative approach to facilitate data-based decisions related to integrated planning of multimodal infrastructure, thereby reducing logistics cost.
Source: IT hardware PLI 2.0: Centre approves revised PLI scheme with Rs 17,000 cr outlay