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India reportedly considers doubling incentive to encourage PC manufacturing

India is reportedly considering doubling its financial incentives for IT hardware investments to attract Apple, Dell, HP, and Asus to localize their manufacturing.

According to Bloomberg, India’s Ministry of Electronics and Information Technology plans to revamp the Production Linked Incentive (PLI) for IT hardware, including notebooks, tablet servers, and all-in-one PCs, to encourage companies such as Apple, Dell, HP, and Asus to manufacture their products in India, people familiar with the matter said, adding that the incentives each manufacturer receive may reach INR45 billion (US$550 million).

Meanwhile, the Economic Times, citing unnamed officials, reported that the Indian government drafted a revised scheme, PLI for IT hardware 2.0, which hikes financial incentives from 1-4% over four years previously to 4-5.75% over five years and will boost the financial outlay from INR73.5 billion to INR190 billion.

The Economic Times reported that the industry had asked the Indian government to provide incentives for up to eight years and sought incentives in the range of 7-8% to improve the viability of manufacturing in India.

India launched PLI for IT hardware in April 2021 and received applications from 19 companies, including Dell, Wistron’s ICT, Flex, and Foxconn’s Rising Star. Still, among all the applicants, only Dell met the production and investment targets in the first year, the Economic Times reports.

According to the scheme, applicants have to increase their investment and production annually over the base year (fiscal 2021) and localize the production of their components annually, including PCB Assembly, battery packs, power adapters/SMPS, and chassis/cabinets/enclosures.

Unlike the PLI for large-scale manufacturing, which helps India revive its mobile phone ecosystem, PLI for IT hardware fails to attract multinationals to invest in local production due to the inability of domestic manufacturers to meet qualifying requirements, poor capability and demand for local products, and indifference of foreign companies, etc, Fortune India reports.

Besides, there is no basic custom duty levied on imported PC products to encourage PC brands to make in India as India is a signatory of WTO’s Information Technology Agreement 1996. The 1-4% applicable incentive rate offered by PLI for IT hardware is much lower than the 4-6% provided by PLI for large-scale manufacturing.

Apple does not manufacture iPads in India, while HP and Dell have outsourced part of product production to Flex in India. Lenovo is partnering with Wintech for PC and tablet manufacturing, and Acer outsourced manufacturing to India-based Dixon Technologies.

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