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Context: Asus, Dell, and other major electronics companies have applied for the Production Linked Incentive (PLI) scheme to manufacture laptops in India. The PLI scheme is a government incentive program that aims to boost domestic manufacturing and attract large investments in the IT hardware sector.
Details
- Apple, however, has opted not to participate in the PLI scheme. The company has said that it is not currently planning to manufacture laptops in India. Apple's decision is likely due to a number of factors, including the high cost of manufacturing in India, the lack of skilled labour, and the complex regulatory environment.
PLI scheme for IT hardware
About
- The Production Linked Incentive (PLI) scheme is a government initiative aimed at boosting domestic manufacturing in various sectors, including electronics.
- The PLI scheme for IT hardware focuses on the following target segments:
- Laptops
- Tablets
- All-in-One PCs
- Servers
- Ultra Small Form Factor (USFF) computers
- Under the PLI scheme, companies are provided with financial incentives based on their incremental sales of goods produced domestically. This encourages manufacturers to expand their production capacities and invest in India.
- The PLI scheme offers several benefits to the IT hardware sector, including attracting significant investments, creating job opportunities, reducing the country's dependence on imports, and boosting the export of IT hardware products from India.
- The PLI scheme is seen as a positive step by the government to transform the Indian IT hardware sector. By attracting investments and encouraging local manufacturing, India could emerge as a global hub for IT hardware production.
Key Features
Inclusion of Domestic and Foreign Companies
- The scheme's inclusivity by allowing both domestic and foreign companies to participate is a significant feature. This approach promotes healthy competition and encourages various players to invest in and contribute to the growth of the IT hardware sector.
- Domestic companies benefit from opportunities for expansion and modernization, while foreign companies bring in advanced technology, expertise, and international collaboration.
Graded Incentive Structure
- The graded incentive structure is designed to reward companies based on their investments and incremental sales. This approach encourages larger investments, leading to the establishment of advanced manufacturing facilities and higher production volumes.
- By offering higher incentives for greater contributions, the scheme motivates companies to maximize their engagement and impact within the sector.
Transparent and Competitive Bidding Process
- The implementation of the scheme through a transparent and competitive bidding process ensures fairness and equal opportunities for all eligible companies. This process minimizes any potential biases and creates a level playing field, where companies can showcase their capabilities and present their proposals.
- A competitive bidding process encourages companies to offer their best investment plans and strategies to receive the incentives.
Dedicated Task Force for Monitoring
- Establishing a dedicated task force responsible for monitoring and overseeing the progress and compliance of the scheme is a crucial feature. This task force ensures that companies adhere to the terms and conditions of the scheme, properly utilize the incentives, and meet their commitments in terms of investments and sales.
- Regular monitoring helps identify and address any issues promptly, ensuring the scheme's effective implementation and desired outcomes.
Expected Outcomes
Localization of Components
- Encouraging the localization of components and sub-assemblies is crucial for developing a robust manufacturing ecosystem.
- When a larger portion of components and parts are produced domestically, it reduces the dependency on imports and strengthens the supply chain. This leads to cost savings, better control over quality, and increased resilience to disruptions in global supply chains.
- The growth of local suppliers can result in innovation, technology transfer, and the development of specialized skills within the country.
Attracting Investments
- The scheme's efforts to attract significant investments from both domestic and foreign companies can have a transformative impact on the IT hardware sector.
- Investments contribute to the establishment of new manufacturing facilities, research and development centres, and technology hubs. These investments can foster collaboration between industry players and lead to knowledge sharing and technological advancements.
- The inflow of capital also stimulates economic growth, supports job creation, and enhances infrastructure.
Job Creation
- A major positive outcome of the scheme is the generation of employment opportunities within the IT hardware sector.
- Manufacturing facilities, research centres, and other associated industries require a skilled workforce. As the sector expands due to increased localization and investments, a variety of job roles become available, including those in manufacturing, research and development, design, quality control, logistics, and more. This not only reduces unemployment but also contributes to skill development and economic empowerment.
Reducing Import Dependence
- By decreasing India's reliance on imported IT hardware products, the scheme aims to enhance the nation's self-sufficiency. This strategic shift reduces vulnerabilities associated with disruptions in global trade and currency fluctuations.
- As the domestic manufacturing ecosystem matures, the country becomes more self-reliant and less susceptible to external shocks. The government's emphasis on domestic production can result in a favourable trade balance and greater economic stability.
Export Boost
- Increasing exports of IT hardware products manufactured in India is another significant goal of the scheme.
- As the manufacturing ecosystem becomes more competitive and capable of producing high-quality goods, the nation can tap into international markets. This not only expands the customer base but also brings in foreign exchange earnings, contributing to economic growth.
- Exports help showcase India's technological capabilities and drive further investments from abroad.
Conclusion
- The PLI scheme for IT hardware is a well-designed initiative that seeks to foster domestic manufacturing, create jobs, and boost India's position in the global IT hardware market. Through incentives, competitive bidding, and a focus on localization, the scheme has the potential to drive significant positive change in the sector.
Must Read Articles:
PRODUCTION LINKED INCENTIVE SCHEME 2.0 FOR IT HARDWARE: https://www.iasgyan.in/daily-current-affairs/production-linked-incentive-scheme-20-for-it-hardware#:~:text=The%20PLI%20Scheme%202.0%20for%20IT%20Hardware%20aims%20to%20promote,incremental%20sales%20and%20investment%20performance.
PLI: https://www.iasgyan.in/daily-current-affairs/pli
RESTRICTION ON IMPORT OF LAPTOPS: https://www.iasgyan.in/daily-current-affairs/restriction-on-import-of-laptops
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PRACTICE QUESTION
Q. How will the implementation of the Production Linked Incentive (PLI) schemes impact the Indian economy and industries concerning growth, employment, innovation, and sustainability? What key challenges and opportunities exist for enhancing the effectiveness and efficiency of these schemes to successfully achieve their intended objectives?
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https://indianexpress.com/article/explained/explained-economics/manufacturing-laptops-india-pli-8917276/
