Production Linked Incentive Scheme 2.0 for IT Hardware to establish India as global electronics manufacturing hub

The Production Linked Investment Scheme (PLI) for IT Hardware, was initially notified in March 2021 and proposed a financial incentive to boost domestic manufacturing and attract large investments in the value chain. It gave impetus to the vision of the National Policy on Electronics (NPE 2019) to position India as a global hub for electronics system design and manufacturing (ESDM) by encouraging and incentivising capabilities in India for developing core components, including chipsets, and creating an enabling environment for the Industry to compete globally.

To capitalise on India’s presence as one of the fastest-growing digital economies and build on the success of the Production Linked Incentive Scheme for mobile phones, the union cabinet two weeks ago approved the Production Linked Incentive Scheme 2.0 for IT Hardware.

Such initiatives undoubtedly acknowledge that the global electronics manufacturing ecosystem is coming to India and with a budgetary outlay of 17,000 crore the Production Linked Incentive Scheme 2.0 for IT Hardware is slated to propel India into the fore as a global electronics manufacturing country.

Such initiatives undoubtedly acknowledge that the global electronics manufacturing ecosystem is coming to India and with a budgetary outlay of 17,000 crore the Production Linked Incentive Scheme 2.0 for IT Hardware is slated to propel India into the fore as a global electronics manufacturing country.

The Production Linked Incentive Scheme 2.0 for IT Hardware covers laptops, tablets, all-in-one PC’s, servers and ultra-small form factor devices. The budgetary outlay allocated for the scheme is Rs. 17,000 crore and the tenure of the scheme is 6 (six) years. The minimum thresholds required to be achieved by a successful applicant, in any given year, to be eligible for an incentive under the Production Linked Incentive Scheme 2.0 for IT Hardware include an expected incremental production of Rs. 3.35 Lakh crore, an expected incremental investment of Rs. 2,430 crore and incremental direct employment of 75,000.

The revised PLI Scheme 2.0 is expected to encourage large IT hardware companies to flock to India to establish manufacturing facilities in India, not only to supply to domestic markets within India but also to utilize the facilities situated in India as export hubs for exporting to foreign markets.

Applicants intending to apply under the scheme would have to show their capacity for achieving the aforementioned targets in order to be considered eligible to move an application under the Production Linked Incentive Scheme 2.0 for IT Hardware.

Related article: Production Linked Incentive (PLI) Scheme: Here is how it works 

As India emerges as a major contender and trusted supply chain partner in the ESDM segment, incentives to be disbursed under the Production Linked Incentive Scheme 2.0 for IT Hardware are expected to encourage large IT hardware companies to flock to India to establish manufacturing facilities in India, not only to supply to domestic markets within India but also to utilize the facilities situated in India as export hubs for exporting to foreign markets.

Entities interested in moving an application under the Production Linked Incentive Scheme 2.0 for IT Hardware would need to follow the Ministry of Electronics and Information Technology closely for updates on the notification of the scheme and its guidelines.

About the Author:

Mr. Sunil Tyagi, has been a practicing lawyer for over 30 years and is the Managing Partner and Co-founder of ZEUS Law Associates. He leads the Real-Estate & Infrastructure, Corporate & Commercial Law and Compliance divisions. He is well versed in the intricacies of Indian Civil Law, Business and Commercial Law and regularly advises foreign investors as well as Indian entrepreneurs on their business and legal strategy with respect to investment in India.

ZEUS Law Associates is an ISO certified full service corporate commercial law firm with a team of dedicated and experienced lawyers well versed in handling domestic and cross border transactions across sectors, jurisdictions and regulatory landscapes. The firm’s distinct practice areas include Corporate & Commercial Law, Real Estate & Infrastructure, Litigation, Alternate Dispute Resolution, Indirect Tax and NRI Services.