PRODUCTION LINKED INCENTIVE SCHEME 2.0 FOR IT HARDWARE

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Context: The Government of India has launched the Production-Linked Incentive (PLI) Scheme 2.0 for IT Hardware as part of its vision to make India a global hub for manufacturing and exporting IT products.

Details

• The PLI Scheme 2.0 for IT Hardware is a part of the Atmanirbhar Bharat initiative, which aims to make India self-reliant and resilient in various sectors of the economy.
• It is also in line with the National Policy on Electronics 2019, which envisages creating a conducive environment for the development of the electronics system design and manufacturing (ESDM) industry in India.

Key Features

• The PLI Scheme 2.0 for IT Hardware aims to promote domestic production of IT hardware products such as laptops, tablets, all-in-one PCs, servers and ultra-small form factor (USFF) devices, by offering financial incentives to eligible companies based on their incremental sales and investment performance.
• The scheme also covers the manufacturing of key components and sub-assemblies such as semiconductor design, IC manufacturing, and packaging, which are essential for developing a robust and competitive IT hardware ecosystem in India.
• It will provide an average incentive of around 5% on net incremental sales (over base year) of goods manufactured in India and covered under the target segment, for a period of six (6) years.
• It has been designed to provide flexibility and options for applicants and to encourage the localisation of the value chain within the country.
• It is expected to generate employment opportunities, boost innovation, enhance exports, and contribute to the overall growth of the IT sector in India.

Significances

• It will enhance India's competitiveness in the global market and increase its share in global IT hardware exports.
• It will reduce India's dependence on imports of IT hardware products, which account for a major part of the electronics import bill.
• It will promote the development of a robust IT hardware ecosystem in India, with backward and forward linkages, and foster innovation and R&D in this sector.
• It will generate additional direct and indirect employment and create a multiplier effect on the economy.

Challenges

• Availability of skilled manpower and quality infrastructure for IT hardware manufacturing.
• Compliance with environmental and safety standards and regulations.
• Protection of intellectual property rights and data security.
• Competition from other countries that offer similar or better incentives and support to IT hardware manufacturers.
• Coordination among various stakeholders such as central and state governments, industry associations, academia and research institutions.

Way forward

• Creating a conducive policy environment and simplifying the regulatory framework for IT hardware manufacturing.
• Providing adequate infrastructure support such as power, water, logistics, connectivity and land.
• Developing a skilled workforce and enhancing their capacity through training and education.
• Encouraging innovation and R&D in IT hardware products and processes.
• Strengthening the domestic demand and creating awareness among consumers about the benefits of buying locally made IT hardware products.

Must-Read Articles:

Production Linked Incentive (PLI) Schemes: https://www.iasgyan.in/daily-current-affairs/production-linked-incentive-pli-schemes

PLI for IT Hardware: https://www.iasgyan.in/daily-current-affairs/pli 

PRACTICE QUESTION Q. The Production Linked Incentive (PLI) schemes are a set of initiatives to boost domestic manufacturing and attract foreign investments in various sectors. How will it impact the Indian economy and industry in terms of growth, employment, innovation, and sustainability, and what are the key challenges and opportunities for improving the effectiveness and efficiency of these schemes in achieving their objectives?

 https://pib.gov.in/PressReleasePage.aspx?PRID=1939553 

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