IT hardware PLI scheme may be reworked after industry raises concerns

Representative Image

The government may rework the IT hardware production-linked incentive scheme to address concerns that the incentives were not enough to provide a business case to invest in facilities in India, CNBC-TV18 said on June 29.

Sources told the channel that the hardware PLI scheme, aimed at encouraging manufacturing in India, has been a “non-starter” due to the low incentives, which vary from 1 to 4 percent. It makes business sense to import these goods rather than manufacturing them in country and put in additional capital investment, sources said.

Senior officials told CNBC-TV18 that the industry’s concerns were “genuine and bona fide”, and conceded that the ministry was working towards re-fashioning the scheme to improve the incentives on offer.

Officials said reworking the scheme was a complicated process, dues to a number of tariff lines and import related that would need to be ironed out. Therefore, “not expect anything before March 2023”.

It will also take time because the finance ministry would have to be consulted as the change will require additional funds being allocated to the industry.

The government had announced the IT hardware PLI scheme in February 2021, with a fixed outlay of Rs 7,350 crore over a four-year period.

Under the scheme, domestic players investing Rs 20 crore and clocking sales of Rs 50 crore in the first year, Rs 100 crore in the second, Rs 200 crore in the third, and Rs 300 crore in the final year would pocket incentives of 1-4 percent on incremental sales over 2019-20, the base financial year.