MeitY draft: PLI outlay for laptops, servers at Rs 7,500 crore

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January 18, 2021 5:10 AM

The investment targets for overseas players would be fixed at around Rs 500 crore spread over a period of four years (Rs 125 crore per year) while for local companies it would be Rs 20 crore (Rs 5 crore per year).

Official sources told FE the government is likely to offer incentives in the range of 2-4% to local and global companies.MeitY is hoping to roll out the scheme by April 1 following an in-principle clearance by the Cabinet.

The outlay for production-linked incentives to make laptops, tablets, personal computers and servers has been pegged at Rs 7,500 crore with the benefits expected to be in the range of 2-4%. Much like it did when it rolled out production-linked incentive (PLI) scheme for manufacturers of mobile phones, the government is likely to set different qualifying targets for domestic and overseas companies, official sources told FE. While overseas players would be eligible for incentives if laptops are priced over Rs 30,000 and tablets cost more than Rs 15,000, local players would not be subject to this condition. MeitY is hoping to roll out the scheme by April 1 following an in-principle clearance by the Cabinet.

The investment targets for overseas players would be fixed at around Rs 500 crore spread over a period of four years (Rs 125 crore per year) while for local companies it would be Rs 20 crore (Rs 5 crore per year). The annual production targets over the base year, that would make firms eligible for the benefits, are yet to be decided.

India is aspiring for a more than five-fold increase in electronics manufacturing to $400 billion by FY2025, by focusing on export markets and incentivising manufacturers to become globally competitive. In the case of laptops tablets and servers, the objective is to try and transfer 20% to 30% of the world’s manufacturing to India.

Last April, the government rolled out a PLI scheme for large scale electronics manufacturing. The scheme extended incentives of 4% to 6% on incremental sales over the base year for goods manufactured in India for a period of five years subsequent to the base year as defined. However, applicants have indicated to the government they will not be able to meet the manufacturing targets before the March-end deadline and have sought a rollover of the milestones to the second and third years. This is only for those firms that meet their investment targets for the first fiscal.

Experts believe mobile PLI-applicant companies are likely to meet first-year incremental revenue target despite challenges posed by Covid-19. Given low base and large entry-level mobile market (1,300 millio units below $200), incremental revenue targets for domestic mobile manufacturers should not be hard to achieve.

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