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NEW DELHI : Computer hardware makers have requested the government not to set a minimum investment criterion for claiming incentives under a new production-linked incentive (PLI) scheme for making laptops, tablets, computers, and servers and link incentives to output from existing facilities.
Hardware manufacturers have argued that the investment criteria have become an obstacle to participating in the scheme, as many players have already made significant investments in capacity that is currently underutilized due to the decrease in demand following the pandemic.
“Ideally, the investment criteria should be removed from the PLI scheme, and we should keep the focus on catalyzing production. If this is not completely possible, then we should have a soft touch approach with maximum cumulative investment for global value chains at ₹200 crore or ₹250 crore,” the industry representing large IT hardware makers said in a communication last week. The letter was reviewed by Mint.
The proposed PLI scheme for IT hardware has been in development since early this year, with draft proposals suggesting an increase in the average incentive to 5.34% from 2.3% on net incremental sales over the base year for goods manufactured in India. Global companies making laptops priced above ₹30,000, tablets above ₹15,000, computers and servers would be required to make cumulative investments of ₹700 crore over five years and achieve incremental sales of manufactured goods up to ₹20,000 crore to meet the minimum eligibility criteria for the scheme. Domestic companies would be required to invest ₹25 crore and achieve sales of ₹500 crore over the same five-year period.
Queries sent to the spokesperson for the ministry of electronics and information technology did not elicit a response as of Wednesday evening.
Under the previous version of the scheme, companies were eligible for incentives of 4% to 2% or 1% on net incremental sales. Global companies were required to make cumulative investments of ₹500 crore over four years, while incremental sales of manufactured goods had to reach ₹10,000 crore. Domestic companies were required to make cumulative investments of ₹20 crore and achieve incremental sales of ₹300 crore over the same four-year period.
The government approved the participation of more than a dozen companies, including Dell International Services, Flextronics, and Rising Stars Hi-Tech (a unit of Foxconn), under the previous scheme.
But total investments into the scheme came to only ₹123 crore as of June 2022, versus projected investments of ₹2,500 crore, according to data seen by Mint. The outlay of the scheme was $1 billion with a production of ₹1.6 trillion; but, the value of production stood at ₹3,165 crore, the data showed.
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
