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

Source: The post is based on the article “Centre more than doubles outlay on PLI for IT hardware to ₹17,000 crore” published in The Hindu on 18th May 2023

What is the News?

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

What is the PLI Scheme 1.0 for IT Hardware?

The PLI scheme for IT hardware was initially introduced in March 2021.

Under the scheme, domestic players investing Rs 20 crore and clocking sales of Rs 50 crore in the first year, Rs 100 crore in the second, Rs 200 crore in the third, and Rs 300 crore in the final year, would get incentives of 1-4% on incremental sales over 2019-20, the base financial year. 

How has this PLI scheme 1.0 for IT Hardware performed?

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.

What are the changes made in the PLI Scheme 2.0 for IT Hardware?

The incentive rate has been increased to 5%, offering a higher benefit to companies investing in domestic manufacturing.

Companies that locally manufacture certain components including memory modules, solid-state drives and display panels will also get additional incentives under the restructured scheme. 

If the optional incentives are utilized as intended, the total incentive under the scheme could amount to 8-9%.

There will also be flexibility in choosing the base year as well.