HP, Dell, Foxconn sign up for PLI 2.0

Jun 17, 2023

NEW DELHI : Top multinationals such as Hewlett Packard Enterprise Development LP, HP Inc., Dell Inc., Foxconn Technology Group, Acer Inc. and Thomson, and domestic companies including Dixon Technologies (India) Ltd, VVDN Technologies and Netweb Technologies, are among 38 aspirants for India’s IT Hardware PLI 2.0 scheme, marking a win for the government attempting to incentivize local manufacturing of laptops, tablets and servers.

Electronics, IT and telecom minister Ashwini Vaishnaw said on Wednesday evening that response to the scheme was more than anticipated. He said the government is expecting investments of ₹4,000 crore, generating direct employment for 75,000 people, and incremental production of ₹3.35 trillion.

As of late night, before the deadline, 38 applications had been received, amounting to a subscription of ₹22,880 crore, far higher than the ₹17,000 crore budgeted outlay for the scheme. “The companies are coming and everybody is working on developing their local supply chain," Vaishnaw said, adding production under the scheme is expected to begin this fiscal year itself. Companies will get a choice between FY24 and FY25 to begin availing of incentives under the scheme.

“India is emerging as a trusted supply-chain partner and value-added partner... companies are happy to come to India for manufacturing and design," he added.

The six-year production-linked incentive (PLI) scheme for IT hardware—laptops, tablets, all-in-one personal computers, servers and ultra small form factor devices—with an outlay of ₹17,000 crore had aimed to attract top hardware companies, such as HP India unit HP India Sales Pvt. Ltd, Dell and Apple Inc. Apple has not applied under the scheme, but one of its contract manufacturers Foxconn, under the entity Rising Stars Hi Tech, is among the 38 applicants. Government officials said they were in talks with Apple to make iPads in the country. A few weeks ago, Hewlett Packard Enterprise said it would invest $1 billion in India to make servers. Among local electronics manufacturers, Dixon Technologies’ subsidiary Padget Electronics Pvt. Ltd and Optiemus Electronics Ltd have applied.

Several of the global applicants are set to get impacted by the import restrictions that will take effect on 1 November, as they will have to mandatorily take licences from customs authorities to import laptops, tablets, all-in-one personal computers, servers and ultra small form factor devices. Many of the companies that have headquarters in the US, have also sought government-backed intervention in putting a stop to the import restrictions. Notably, US trade representative Katherine Tai in her recent meeting with commerce minister Piyush Goyal too had raised concerns that stakeholders should be engaged in the policy regarding import licensing requirements and the move should not have adverse impact on US exports to India.

However, Vaishnaw said when government officials asked companies about the licensing rule at a recent meeting, they did not communicate any concern or issues.

“There will be no disruption, all companies that apply will be issued the licences," a senior ministry official said on condition of anonymity.

The second version of the scheme appears to have been better received than the first one issued in 2021 with an outlay of about ₹8,000 crore, when most global players stayed away. In the IT Hardware PLI 2.0, an incentive of 5% will be provided by the government on net incremental sales, over the base year, of goods manufactured in India, compared to 2% earlier, where the base year can be chosen starting from FY23.

The scheme also provides for flexibility as the investments can be done over six years, instead of four years earlier. Companies opting for the scheme will get additional optional incentive of another 3% if they use India-made and designed components, sub-systems or inputs. Also, the companies can onboard Indian contract manufacturers and avail incentives if the contractors are producing for a single company. Investments from Chinese manufacturers would also be allowed in accordance with existing regulations.

“Netweb has been already successfully running the earlier PLI and we are quite excited to be participating in PLI 2.0. Importantly, the scheme facilitates a smooth transition for entities previously engaged in PLI 1.0, presenting us with the opportunity to seamlessly migrate while potentially achieving a ‘plus’ applicant status," Sanjay Lodha, the chairman and managing director of Netweb Technologies, said. Server maker Netweb is one of the three recipients of incentives under the PLI 1.0, wherein the total incentives given out were under ₹60 crore.

“We welcome the PLI scheme for IT hardware manufacturing and look forward to exploring new opportunities to meet the growing demand for personal computers. India is a dynamic growth market and we are excited about the possibilities ahead," an HP India spokesperson said.