The government has extended the deadline to file applications for availing the production linked incentive (PLI) scheme for IT hardware to April 30 as the guidelines for implementing the scheme are yet to be issued. The earlier deadline to submit applications was March 31.
Sources said the scheme has been well received by the industry and so far, around 15 domestic companies as well as 4-5 global firms have expressed their desire to file applications. But due to lack of clarity regarding implementation and operationalisation of the scheme, the industry has sought more time from the government to apply.
Though the industry was initially not very happy with the outlay of the scheme, which stands at Rs 7,350 crore over a four-year period, but sensing a big opportunity in the domestic market, most of the players responded positively to the scheme. As per the public procurement (Make in India) order issued by the government, preference is given to locally manufactured products.
As per estimates, of the overall IT hardware market in the country, 40% is based on public procurement from government and its allied departments, including educational sector, healthcare, among others. When it comes to enterprise segment, the share of public procurement is as high as 60%.
The Manufacturers’ Association of Information Technology (MAIT), whose members include Dell, HP, Acer and Lenovo has welcomed the decision to grant extension.
“We understand that the PLI for IT hardware has got good response from the industry. The industry had requested the government for an extension due to the very brief window initially given for the application. With an extension given by the government for filing the applications, the industry will get sufficient time to apply once the guidelines are also published by the government,” MAIT stated.
Last month, the government approved the PLI scheme for IT hardware manufacturing including laptops, tablets, all-in-one PCs and servers. During the four-year period of the scheme, the government has estimated a production of up to Rs 3.26 lakh crore, of which more than 75% is expected to be exports of the order of Rs 2.45 lakh crore. The scheme is expected to bring an additional investment in electronics manufacturing to the tune of Rs 2,700 crore.
The scheme aims at providing incentive of 4% to 1% on net incremental sales over base year (2019-20) to the selected companies. Under this, 5 global players and 10 domestic firms would be selected. The government said that the scheme has a potential of generating over 1,80,000 direct and indirect jobs over the four-year period.
The government has approved two PLI schemes on similar lines, one for mobile phones and the other for telecom equipment. While the outlay for mobile phones has been kept at Rs 41,000 crore for a period of five years providing incentives ranging between 4-6%, the one for telecom equipment has an outlay of Rs 12,195 crore for a period of five years providing incentives in the range of 4-7%.
“The mobile phone PLI came with significant tailwinds of 4-5 years of solid growth. The IT hardware companies are not as prepared and need a little more time. The extension is well considered,” Pankaj Mohindroo, chairman, ICEA said.
Currently, 80% of the laptop and tablet demand in the country is met through imports valued at Rs 29,470 crore ($4.21 billion) and at Rs 2,870 crore ($ 0.41 billion) respectively.
The market for IT hardware is dominated by 6-7 companies globally which account for about 70% of the world’s market share.