Lok Sabha Question No. 3527 (UNSTARRED), answered on 2021-03-17
Subject: PLI Scheme for IT Hardware Products
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Shrikant Eknath Shinde, Sanjay Sadashivrao Mandlik, Chandra Sekhar Sahu, Rajendra Dhedya  Gavit, Bidyut Baran Mahato, Sudheer Gupta

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 3527

TO BE ANSWERED ON 17.03.2021

## PLI SCHEME FOR IT HARDWARE PRODUCTS

## 3527.   SHRI SHRIRANG APPA BARNE:

SHRI SANJAY SADASHIVRAOMANDLIK:

SHRI CHANDRA SEKHAR SAHU:

SHRI RAJENDRA DHEDYA GAVIT:

SHRI BIDYUT BARAN MAHATO:

SHRI SUDHEER GUPTA:

Will the Minister of ELECTRONICS AND INFORMATION TECHNOLOGY be pleased to state:

- (a) whether the Government has made any assessment with regard to expected promotion in the production  of  Information  Technology(IT)  Hardware  products  by  the  Production  Linked Incentive(PLI) scheme and if so, the details and the outcome thereof;
- (b) whether the PLI scheme will increase the value addition in the IT Hardware products and their exports and if so, the details thereof;
- (c) whether the scheme will enhance the development of electronics ecosystem in the country and make  country  a  global  hub  for  Electronics  System  Design  and  Manufacturing  (ESDM)  on account  of  integration  with  global  value  chains,  and  become  destination  for  IT  Hardware exports and it so, the details thereof;
- (d) the  details  of  the  investments  and  employment  opportunities  likely  to  be  increased    in  the country after the implementation of PLI Scheme in IT Hardware sector in the country; and
- (e) the other steps taken/being taken by the government to boost the production of IT Hardware sector in the country?

## ANSWER

MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI SANJAY DHOTRE)

(a) and (b): The Production Linked Incentive Scheme (PLI) for IT Hardware was notified on March 03,  2021.  The  scheme  is  likely  to  benefit  major  global  as  well  as  domestic  manufacturers  of  IT hardware products, namely, Laptops, Tablets, All-in-One PCs, and Servers. The total budget outlay of the PLI Scheme for IT Hardware is INR 7,350 crore over 4 years. The Scheme shall extend incentive of 4% to 2%/ 1% on net incremental sales (over base year, i.e. 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years.

Over  4  years,  the  scheme  is  expected  to  lead  to  a  total  production  of  about  INR  3.26  lakh  crore including exports worth Rs. 2.45 lakh crore. Domestic value addition for IT  Hardware is expected to rise to 20% - 25% by 2025 from the current 5% - 10% due to the impetus provided b the Scheme.

- (c):  The  major  outcome  of  the  PLI  Scheme  for  IT  Hardware  will  be  the  development  of  comput hardware manufacturing ecosystem in the country. India will be well positioned as a global hub fo Electronics System Design and Manufacturing (ESDM) on account of integration with global valu chains, thereby becoming a destination for IT Hardware exports. The PLI Scheme for IT Hardware i expected  to  attract  5  major  global  players  and  promote  10  domestic  champions  in  the  field  of  I Hardware manufacturing.
- (d): Over 4 years, the PLI Scheme for IT Hardware is expected to bring in additional investment in I Hardware manufacturing to the tune of  INR 2,700 crore  and has a potential  to  generate  more  tha 1,80,000 jobs (direct and indirect).

(e):  The  steps  taken  taken  by  the  government  to  boost  electronics  manufacturing  including  th production of IT Hardware in the country is annexed.

********

Steps taken by the government to boost electronics manufacturing including the production of IT Hardware in the country

National  Policy  on  Electronics  2019 :  The  National  Policy  on  Electronics  2019  (NPE  2019)  has  been notified on 25.02.2019. The vision of NPE 2019 is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core  components,  including  chipsets,  and  creating  an  enabling  environment  for  the  industry  to  compete globally.

ttract and incentivize large investments in the electronics value chain and promote exports, following three mes have been notified under the aegis of NPE 2019:

- Production  Linked  Incentive  Scheme  (PLI) for  Large  Scale  Electronics  Manufacturing  notified  vide Gazette Notification No.CG-DL-E-01042020-218990 dated April 01, 2020 provides an incentive of 4% to 6% to eligible companies on incremental sales (over base year) involved in mobile phone manufacturing and  manufacturing  of  specified  electronic  components,  including  Assembly,  Testing,  Marking  and Packaging (ATMP) units.
- Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) notified vide Gazette Notification No.CG-DL-E-01042020-218992 dated April 01, 2020 provides financial incentive  of  25%  on  capital  expenditure  for  the  identified  list  of  electronic  goods  that  comprise downstream  value  chain  of  electronic  products,  i.e.,  electronic  components,  semiconductor/  display fabrication units, ATMP units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods.
- Modified  Electronics  Manufacturing  Clusters  (EMC  2.0)  Scheme notified  vide  Gazette  Notification No.CG-DL-E-01042020-218991 dated April 01, 2020 shall provide support  for  creation  of  world  class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play facilities for attracting major global electronics manufacturers along with their supply chain to set up units in the country. The Scheme shall provide financial assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country.
- Production Linked Incentive Scheme (PLI) for IT Hardware notified vide Gazette Notification No.CGDL-E-03032021-225613 dated March 03, 2021 provides an incentive of 4% to 2% / 1% on net incremental sales  (over  base  year)  of  goods  manufactured  in  India  and  covered  under  the  target  segment,  to  eligible companies, for a period of four (4) years. The Target Segment under PLI Scheme includes (i) Laptops (ii) Tablets (iii) All-in-One PCs and (iv) Servers.
- 100% FDI :  As  per  extant  Foreign  Direct  Investment  (FDI)  policy,  FDI  up-to  100%  under  the  automatic e is permitted for electronics manufacturing (except from countries sharing land border with India), subject plicable laws/ regulations; security and other conditions.
- Modified Special Incentive Package Scheme (M-SIPS) :  The Scheme was notified on 27 th July, 2012 to ide financial incentives to offset disability and attract investments in the electronics manufacturing sector. It amended in August, 2015 to extend the period of the scheme, enhance scope of the Scheme by including 15 e  product  verticals,  and  attract  more  investment.  The  scheme  was  further  amended  in  January,  2017  to dite the investments. The scheme provides subsidy for capital expenditure - 20% for investments in Special nomic Zones (SEZs) and 25% in non-SEZs. The incentives are available for 44  categories / verticals  of tronic  products  and  components  covering  entire  electronics  manufacturing  value  chain.  The  Scheme  was to receive applications till 31.12.2018 and is in the implementation mode.

Electronics  Manufacturing  Clusters  (EMC)  Scheme :  Electronics  Manufacturing  Clusters  Scheme  was fied on 22 nd October, 2012 to provide support for creation of world-class infrastructure along with common ities  and  amenities  for  attracting  investment.  Under  the  Scheme,  20  Greenfield  EMCs  and  3  Common lity Centres (CFCs) measuring an area of 3,565 acres with total project cost of INR 3,898 crore including ernment Grant-in-Aid of INR 1,577 crore have been approved.

5. Electronics Development Fund (EDF) : Electronics Development Fund (EDF) has been set up as a 'Fund of Funds' to participate in professionally managed 'Daughter Funds' which in turn will provide risk capital to startups  and  companies  developing  new  technologies  in  the  area  of  electronics  and  Information  Technology (IT). This fund is expected to foster R&D and innovation in these technology sectors. INR 409 crore has been committed through EDF to 9 Daughter Funds with a targeted corpus of INR 2,626 crore.
6. Phased  Manufacturing  Programme  (PMP) has  been  notified  to  promote  domestic  value  addition  in mobile handsets and their sub-assemblies / parts manufacturing. As a result, India has rapidly started attracting investments  into  this  sector  and  significant  manufacturing  capacities  have  been  set  up  in  the  country.  The manufacturing of mobile handsets has been steadily moving from Semi Knocked Down (SKD) to Completely Knocked Down (CKD) level, thereby progressively increasing the domestic value addition.
7. Tariff Structure has been rationalized to promote domestic manufacturing of electronic goods, including, inter-alia, Cellular mobile handsets, Televisions, Electronic components, Set Top Boxes for TV, LED products and Medical electronics equipment.
8. Exemption  from  Basic  Customs  Duty  on  capital  goods :  Notified  capital  goods  for  manufacture  of specified electronic goods are permitted for import at 'NIL' Basic Customs Duty.
9. Simplified  import  of  used  plant  and  machinery :  The  import  of  used  plant  and  machinery  having  a residual life of at least 5 years for use by the electronics manufacturing industry has been simplified through the amendment of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, vide Ministry of Environment, Forest and Climate Change Notification dated 11.06.2018.
10. Relaxing the ageing restriction : The Department of Revenue vide Notification No.60/2018-Customs dated 11.09.2018 has amended the Notification No.158/95-Customs dated 14.11.1995, relaxing the ageing restriction from 3  years  to  7  years  for  specified  electronic  goods  manufactured  in  India  and  re-imported  into  India  for repairs or reconditioning.
11. Public Procurement (Preference to Make in India) Order : To encourage 'Make in India' and to promote manufacturing  and  production  of  goods  and  services  in  India  with  a  view  to  enhancing  income  and employment, the Government has issued Public Procurement (Preference to Make in India) Order 2017 vide the Department  for  Promotion  of  Industry  and  Internal  Trade  (DPIIT)  Order  dated  15.06.2017  and  subsequent revisions  vide  Orders  dated  28.05.2018,  29.05.2019  and  04.06.2020.  In  furtherance  of  the  aforesaid  Order, MeitY has notified 13 Electronic Products viz., Desktop PCs, Laptop PCs, Thin Clients, Tablet PCs, Computer Monitors, Dot Matrix Printers, Contact and Contactless Smart Cards, LED Products, Biometric Access Control / Authentication Devices, Biometric Finger Print Sensors, Biometric Iris Sensors and Servers vide Notification dated 07.09.2020.
12. Compulsory Registration  Order  (CRO) :  MeitY  has  notified  'Electronics  and  Information  Technology Goods (Requirement of Compulsory Registration) Order, 2012' for mandatory compliance to ensure safety of Indian citizens by curbing import of substandard and unsafe electronic goods into India. 63 Product Categories have been notified under the CRO and the order is applicable on 44 product categories.
13. National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) has  been set up in IITKanpur  with  the  objectives  to  promote  R&D;  Manufacturing;  Ecosystem;  Entrepreneurship;  International Partnerships and Human Resources and develop prototypes in collaboration with industry for commercialization.
14. National Centre of Excellence for Technology on Internal Security (NCETIS) has been set up at IIT-Bombay with the objective to address the internal security needs of the nation on

continuous  basis  by  delivering  technology  prototypes  required  for  internal  security  and  to promote domestic industry in internal security. 15. National  Centre  of  Excellence  for  Next  Generation  AMOLED  Displays,  OLED  Lighting  and  OPV Products has  been  set  up  at  IIT-Madras  with  a  mandate  to  collaborate  with  stakeholders  to  develop  nextgeneration, state-of-the-art, high-volume and cost-effective electronic components based on organic devices to address requirements through joint technology developments, to realize indigenous technologies for manufacturing. 16. Centre on Excellence (CoE) on Medical Electronics and Bio-Physics has  been  approved  to  set  up  at Andhra  pradesh  MedTech  Zone  (AMTZ),  Visakhapatnam  with  a  mandate  of  carrying  out  various  R&D activities,  strengthening  innovations,  IP  creation,  prototype  modelling  for  Medical  Device  Manufacturers, including Electro-Biomaterial technology product manufacturers etc.

********